The Role of ERP Integration Services in Achieving E-Invoicing Compliance in the U.S.

To reduce costs and enhance efficiency in the invoicing process, the US is steadily moving towards e-invoicing, which involves sending and receiving invoices electronically instead of using traditional paper-based invoices.

However, achieving e-invoicing compliance can be complex, especially for organizations that use Enterprise Resource Planning (ERP) systems, as these systems often lack native e-invoicing capabilities. This is where ERP Integration services come in!

This article will examine how ERP integration can help businesses achieve e-invoicing compliance in the US.

Overview of e-invoicing in the U.S

The United States is among the last countries to embrace electronic invoicing. However, the US is now gradually embracing e-invoicing to reap its benefits, which include enhancing efficiency, reducing cost, and combating fraud in the invoicing process.

In recent years, the US government has taken steps to promote electronic invoicing.

One landmark step was the implementation of the Federal Financial Management Improvement Act (FFMIA) in 1996. This law required federal agencies to implement financial management systems that comply with specific standards, including e-invoicing.

Then, in 2015, the Office of Management and Budget (OMB) issued an e-invoicing mandate, requiring all federal agencies to start issuing electronic invoices by the end of 2018. This effectively made e-invoicing compulsory for all agencies and government departments, including the General Services Administration (GSA), the Department of Defense (DoD), and the Department of Energy (DoE).

Later, the US established the Business Payment Coalition (BPC) with the goal of promoting electronic invoicing between businesses.

The BPC then launched a Market Pilot to test the viability of a business-to-business e-invoicing system in the USA. The pilot, which ran until 2022, was intended to ensure that by 2023, the US would have an operational B2B system allowing businesses to exchange e-invoices with one another.

Also read: The Future of E-invoicing in the US: Trends and Regulations Shaping the Landscape.

E-invoicing requirements in the U.S

While federal agencies in the US are required to comply with electronic invoicing, businesses and individuals are not required to.

However, most businesses choose to use e-invoices because they offer numerous benefits, such as faster processing, reduced errors, cost savings, etc.

To send compliant electronic invoices, the invoices must be in a specific format and meet specific e-signature and archiving requirements. The requirements include:

XML-based Universal Business Language (UBL) format: The electronic invoices must use the XML-based Universal Business Language (UBL) format. UBL defines a set of standards for electronic invoices, ensuring that e-invoices are always consistent as opposed to paper-based invoices that can vary widely in format and structure.
Digital signature: They must include a digital signature. This helps verify the authenticity of the sender and the integrity of the invoice, enhancing the overall security of the e-invoicing processes.
Unique identification number: People are required to generate a unique identification number or include an IRN (Invoice Reference Number) in their invoice’s subject line. Receivers only need to provide senders with a valid email address or a web-based system where the invoice can be sent/uploaded.
Archiving requirement: The US has a 7-year invoice archiving requirement, meaning that when you issue an electronic invoice, you must retain the invoice and any other supporting document for at least seven years.

What is the e-invoicing process in the U.S.?

The US uses a four-corner e-invoicing architecture similar to PEPPOL. Here is how the e-invoicing process works:

Find a reliable Access Point Provider

You need an Access Point (AP) provider to provide you with an access point to the e-invoicing network so you can send an e-invoice to another person on the network. This is similar to how you need a telecom provider to give you access to a telecommunication network so you can send a text message to another person on the network.

When you send an electronic invoice over the US e-invoicing network, it moves from your station to your AP provider. Your AP provider ensures the e-invoice meets relevant standards and sends it to the receiver's AP provider. Then, it makes the last movement from the receiver’s AP provider to the receiver.

So, the e-invoicing process in the US starts with finding a reliable Access Point provider that will help you access the e-invoicing network.

Storecove is among the most reputable AP providers in the US e-invoicing space. Storecove was even part of the BCP pilot project that tested the viability of B2B e-invoicing in the US.

In fact, the first e-invoice on the US e-invoicing network was successfully received by Storecove.

Register on the network

After choosing an access point provider, the next step in the e-invoicing process is registering you on the network so that they can authenticate your business as a legitimate user of their e-invoicing services.

Registration ensures that only authorized users can send and receive electronic invoices through the network. The registration process typically involves providing certain configuration details specific to your business, such as your company’s name, address, contact details, etc.

Connect to the network

After registering with the network, the next step in the e-invoicing process is to connect your accounting software to the AP provider.

Integrating your system with the AP provider enables automated data exchange between your internal systems and the e-invoicing network, allowing you to send and receive compliant e-invoices directly from your system.

Send and receive e-invoices

After connecting to the network, you can start exchanging e-invoices with other users in the network.

The process starts with generating an electronic invoice for goods delivered or services rendered. The invoice must include relevant details about the transaction you are requesting payment for, such as:

Your (being the seller) name and address
Buyer’s name and address
Invoice number
Description of goods or services
Quantities
Prices
Payment terms

Once the e-invoice is generated, it can be transmitted to the seller through your AP provider.

What is the role of ERP integration services in achieving e-invoicing compliance in the U.S.?

ERP integration involves connecting an organization’s ERP software with its other applications. Tools you can connect to your ERP system include e-commerce platforms, human resource management systems, customer relationship management (CRM) systems, etc.

ERP integration services are specialized services that help organizations connect their ERP systems with their other software applications.

An ERP integration service is the cornerstone of efficient business management because it bridges the gap between disparate systems in an organization. It connects these systems, enabling seamless data exchange between them.

Some ways that ERP integration helps businesses achieve e-invoicing compliance in the US include:

Data connectivity: Connecting the various systems within an organization helps ERP integration services ensure that data flows seamlessly between the different departments and systems, including those involved in generating and processing invoices.
Automation: ERP integration services enable the automation of business processes related to invoice generation by integrating invoicing processes with other business functions such as accounting, procurement, and inventory management. For example, when an order is placed on an e-commerce website, ERP integration can automatically create a sales order and generate invoices without manual intervention. The transaction data is automatically copied to the e-invoice, eliminating the need for manual data entry.

In summary, ERP integration services help achieve e-invoicing compliance in the US by facilitating seamless data exchange and workflow automation between ERP platforms and e-invoicing solutions.

Also read: What is E-invoicing Compliance? A Detailed Guide.

Challenges in ERP integration for e-invoicing compliance

Companies implementing integration solutions for e-invoicing compliance often face some challenges. Common challenges include:

Data standardization challenge

E-invoicing mandates usually specify data formats, schemas, and standards to be followed when exchanging electronic invoices. E-invoicing compliance requires adhering to the specific data formats and standards mandated by regulatory bodies.

However, an organization’s ERP system may use a different data format or standard. When the organization’s ERP system and the e-invoicing platform use different data formats, ERP integration for e-invoicing compliance can be challenging.

For example, remember that the US requires electronic invoices to be in XML-based UBL. If your organization’s ERP software uses proprietary data formats or does not support UBL, ERP integration for e-invoicing compliance will be a big challenge.

Without consistent standards, format discrepancies may hinder data exchange between the two systems, leading to data errors, delays, or invoice rejection.

System compatibility challenge

Integrating ERP solutions with external e-invoicing systems may require compatibility with different technologies, protocols, and APIs. Thus, if the ERP system and the e-invoicing platform use different software architectures or communication protocols, ensuring ERP integration for e-invoicing compliance can be challenging.

For example, when the ERP system and e-invoicing platform use different communication protocols or messaging formats for data exchange, integrating the two systems requires implementing middleware, adapters, or conversion tools to translate and map data between the two incompatible interfaces.

Updates or version upgrades can also result in system compatibility challenges. ERP systems and e-invoicing platforms may undergo updates, which can cause the respective versions to become incompatible. And version mismatches can disrupt integration workflows and cause errors.

Compatibility issues can also be caused by system customizations. Certain customizations to ERP systems (such as custom data fields, workflows, or validation rules) may require adjustments to data mapping, transformation, or validation logic, making ERP integration for e-invoicing compliance more challenging.

Scalability and flexibility challenge

As a business evolves, integration solutions must be scalable and adaptable to accommodate growth and address emerging compliance challenges.

For example, as a business grows, it handles more transactions and processes more invoices. ERP integration for e-invoicing compliance can be challenging if the ERP system is not robust enough to handle large transaction volumes.

Upgrades to hardware, software, or cloud infrastructure may be required to scale up the ERP system to accommodate growing transaction volume without compromising performance.

Also, your software ecosystem may become more complex as your business grows, as you will connect more systems, data sources, and stakeholders. Your integration architecture should be able to scale up without introducing bottlenecks.

As you grow, you may also support more transaction types, such as purchase orders, delivery notes, and payment receipts. Your integration solution should be able to accommodate the different transaction types and processing requirements without much issue.

Best practices for implementing ERP integration services

Following ERP integration best practices will help you overcome the challenges associated with ERP integration for e-invoicing compliance and maximize the benefits of e-invoicing. These best practices include:

Define clear objectives

Goals direct efforts. Knowing exactly what you want to achieve will help identify specific processes to streamline or improve with ERP integration.

You can set goals for achieving faster invoice processing, enhancing real-time visibility into invoice status, and ensuring that invoice data is accurately captured, validated, and transmitted, among other things.

When setting goals, ensure they are SMART - Specific, Measurable, Achievable, Relevant, and Time-bound. An example of a smart goal is: “reduce manual processing time by 30% within six months.”

Specific: The goal is specific, as it’s clear.
Measurable: The goal is measurable because it has criteria for measuring progress towards the goal (30% reduction in processing time).
Achievable: The goal is achievable because it is not overly ambitious (like 90 - 100% reduction) but attainable given the organization’s constraints.
Relevant: The goal is relevant because it aligns with the organization’s broader objectives.
Time-bound: The goal is time-bound because it has a deadline for achievement (within 6 months).

Assess current systems

After outlining your goals, the next step is to conduct a thorough assessment of your current systems—your ERP system and any other systems you need to integrate.

A thorough assessment of your systems is important because it provides a comprehensive understanding of your existing systems, processes, and data structures.

For example, assessing your system helps you understand how data flows between the different systems and how they are structured. This is essential for mapping data fields, defining transformation rules, and ensuring data consistency across integrated systems.

Assessing your current systems also helps you understand your systems’ capabilities and limitations regarding data formats, APIs, integration protocols, and scalability. This will enable you to select the most suitable ERP integration strategy and design a robust integration architecture.

Choose the right integration approach

There are different types of integration approaches (like point-to-point, middleware, and API-based integration). The approach you choose impacts the success and maintainability of your integration solution. For this reason, choosing the right integration approach is a critical best practice for implementing ERP integration.

Moreover, the different integration approaches are best suited for specific situations.

For example, point-to-point integration is ideal for simple integrations requiring connecting two systems with a direct one-to-one connection.

However, middleware integration is suitable for complex integrations involving connecting multiple systems by employing an intermediary software that facilitates communication and data transformation between the systems.

So, for successful ERP integration for e-invoicing compliance, ensure you understand your integration needs and select an approach that aligns with these needs.

Ensure data quality

Accurate and reliable data is essential for the success of ERP integration projects. Quality data reduces integration errors, data transformation complexities, and post-implementation issues.

This leads to a smoother integration process and improved system interoperability. For this reason, ensuring data quality is a critical best practice for implementing ERP integration.

Quality data is also essential for making informed business decisions. Ensuring data quality in ERP integration helps prevent errors, inaccuracies, and inconsistencies in data that could lead to faulty analysis and misguided decisions.

To ensure data quality, implement data validation rules, data cleansing processes, and data enrichment techniques to identify and correct errors, duplicates, or missing data.

It also involves implementing access controls, encryption, and data masking techniques to prevent data breaches and safeguard sensitive information from unauthorized access.

Use standardized formats and protocols

Standardized data formats and communication protocols facilitate interoperability and compatibility between ERP and e-invoicing systems.

The e-invoicing platforms usually use industry-standard formats. Using an ERP system that does not support these formats and protocols will result in compatibility issues.

So, to integrate your ERP system with e-invoicing platforms more effectively, it’s important to adhere to standardized formats (like XML or UBL) and protocols (like EDI - Electronic Data Interchange).

Plan for scalability

Businesses evolve and grow over time, and with growth comes an increase in transaction volume, more complex integrations, and more transaction types.

You will not want an integration architecture that cannot accommodate the growth and needs to be overhauled. Thus, planning for growth is a critical best practice when integrating ERP systems for e-invoicing compliance.

Ensure that your integration solution can handle increased data volumes and transaction loads and is flexible enough to easily incorporate new modules or integrations as necessary.

Some ways to implement scalability in ERP integrations of e-invoicing compliance include:

Adopt a modular architecture that allows for easy expansion or contraction of the system by adding or removing modules as needed.
Use cloud-based ERP solutions that offer scalability by providing resources on-demand.
Use scalable infrastructure like scalable networking equipment, servers, and databases.

Takeaway: Stay compliant with e-invoicing requirements in the US with Storecove

The US does not currently require businesses to exchange electronic invoices with one another. However, a pilot study for that has already been concluded and it had amazing success. So, B2B e-invoicing may become mandatory in the near future.

More and more businesses are already embracing electronic invoicing.

ERP integration can help you achieve e-invoicing compliance in the US by connecting your disparate systems (including those involved in generating and processing invoices). This ensures data flow seamlessly between your systems and enables the automation of your financial processes.

Sending compliant e-invoices in the US starts with finding a reliable Access Point provider. Storecove is here to help!

Storecove provides excellent e-invoicing solutions to US businesses. Our solution gives you access to the US e-invoicing network, helps you comply with e-invoicing regulations automatically, and ensures you send compliant e-invoices seamlessly. Contact us today to set up your e-invoicing process.‌‌

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