Why ERP Providers Should Integrate with DBNAlliance: Strategic Advantages in the U.S. Market

The DBNAlliance is an organization that oversees an electronic invoicing network that operates similarly to the PEPPOL network. The exchange framework is a four-corner network model that is gaining traction among businesses in the US.

The network model comprises two access point providers, making B2B e-invoicing achievable despite differences in ERP systems.

ERP providers can further enhance nationwide e-invoicing by integrating with the DBNAlliance to understand the exchange framework's requirements. This allows them to provide better systems and updates to ensure compliance.

The participants of the Business Payments Coalition (BPC) pilot program and the American Federal Reserve created the DBNAlliance to monitor and regulate the now standardized framework in the US.

This framework has helped bridge the interoperability gap between businesses in the US using different ERP systems. It is helping the government overcome the challenge of having a common B2B electronic invoicing network.

However, the Digital Business Networks Alliance (DBNAlliance) has helped bridge this gap by introducing access point service providers to ensure interoperability.

In this post, we’ll focus on how ERP providers can benefit from integrating with the DBNAlliance. We’ll also look at the scope of e-invoicing in the US and an overview of the exchange framework.

Scope of e-invoicing in the US

The US government has long faced challenges implementing a standardized electronic invoicing platform. Some states have mandated their own e-invoicing requirements, making it challenging to allow inter-state B2B transactions.

Let’s look at how electronic invoicing has developed over the years in the US:

Late 1990s to early 2000s

As technology continued to evolve, some large corporations in the states recognized the benefits of e-invoicing and began implementing digital electronic document transmission.

2002

The US General Services Administration (GSA) started an eOffer/eMod initiative that allowed government contractors to modify and issue their contracts electronically.

2007

The Federal Reserve Bank of Minneapolis launched an e-invoice pilot program to test how electronic invoicing would perform among government agencies.

2014

The Department of Defense implemented the first e-invoicing mandate requiring all vendors to submit invoices electronically.

2017

The “Promoting the Launch of Blockchain Applications for Smart Government Act” was launched by the US House of Representatives. It aimed to seek blockchain technology to streamline various government processes, including invoicing.

2018

California passed a law mandating state contractors submit e-invoices using the state’s procurement site, Cal eProcure.

2020

The COVID-19 pandemic accelerated e-invoicing adoption as businesses switched to digital processes to adhere to the social distancing guidelines.

2022

The e-invoicing pilot project by the Business Payments Coalition and the Federal Reserve was a game-changer, establishing a standardized e-invoicing network.

The pilot was implemented in three waves, in which more than 80 organizations participated, making the project one of the most successful e-invoicing developments in the US. It supports multiple payments, including wire, ACH, card, and instant payments.

The BPC and Federal Reserve later formed a non-profit organization, the DBNAlliance, to oversee the exchange framework in 2023. The DBNAlliance governs the framework and supports the digital delivery of electronic invoices between businesses.

Evolution of the US e-invoicing exchange framework

The US invoicing exchange framework is based on technical policies and standards allowing businesses to securely share their electronic supply chain documents.

Introducing access point providers has helped solve businesses' challenges when sharing and receiving invoices between different systems.

This electronic delivery network outlines standards that dictate how businesses connect with each other, what information to transmit, and how to deliver it.

Businesses must have reliable service access providers such as Storecove, who are members of DBNAlliance, to ensure compliance. These providers help you use the e-invoicing network with your current ERP system with little or no change requirement.

Let us look at the three waves in which the US e-invoicing exchange framework came to be:

Wave 1: From 1 April to 30 June 2022, the project focused on setting and testing the technical specifications for transmitting electronic invoices.
Wave 2: The second wave started from 1 July to 30 September 2022, focusing on refining the set specifications and business onboarding steps to increase the chances of success. During this wave, electronic invoices were transmitted to evaluate how the invoicing process would work in real life.
Wave 3: The final wave finalized the specifications while trying to increase the use of e-invoices in the US for B2B transactions. The pilot project was successful and predicted to become available for all businesses in America by 2024.

E-invoicing model used in the exchange framework

The US e-invoicing exchange framework uses a four-corner network model in which electronic documents are sent and received through access points connecting users.

The network model allows the exchange of invoice data through a secure network that uses AS2/AS4 communication protocols. This process enables document status requests, monitoring, and responses.

Here are the parties involved in the e-invoicing process in the US exchange framework:

Supplier

The supplier initiates the e-invoicing process by generating an invoice using their ERP system. They then issue the invoice to their access point service provider.

Supplier’s access point service provider

The supplier’s access providers ensure the electronic invoice adheres to the exchange framework’s standards and regulations. The document must be in the OASIS UBL 2. X format and have information for the following fields:

Supplier and customer details
Shipping information
Payment instructions, including method
Charges, discounts, and taxes
Item descriptions
Notes sections.

Buyer’s access point service provider

This access point provider receives the electronic invoice and ensures it can be accessed through the buyer’s ERP. Storecove is one of the most reputable service providers in the US. We successfully received the first electronic invoice in the country.

Buyer

The buyer receives the invoice and validates the information included before making payment.

Advantages of integrating with DBNAlliance for ERP providers

There are hundreds of ERP systems company owners in the US use for various business processes, including financial management and invoice generation. These systems provide different formats for generating electronic documents and performing other organizational functions.

ERP providers can help business owners generate more compliant e-invoices by integrating with the DBNAlliance to understand the exchange framework.

ERP providers may not gain directly from integrating with the DBNAlliance, but they can develop better customer relationships in the following ways:

Cutting costs for clients

Whether mandatory or voluntary, electronic invoicing allows automation, which positively affects a company’s efficiency. Your ERP can significantly lower client’s costs by:

Reducing delays and manual data entry errors
Streamlining storage and retrieval of invoices to save time
Allowing faster payments
Eliminating costs such as printing, paper, and ink.

Once the ERP is integrated with the DBNAlliance, users spend more time and resources on invoicing processes. Business owners make fewer mistakes to avoid disputes and delays, which cost money.

Streamlining audit processes

Integrating ERPs with the exchange framework allows business owners to provide auditors with immediate access to up-to-date transaction and financial data. Auditors do not have to visit the business since all invoice data is available electronically.

E-invoices are available in a structured format that machines can read, reducing time-consuming manual audits and helping auditors avoid human errors.

The US open electronic exchange network was not developed to focus on tax issues in the country. However, features such as real-time reporting are likely to be implemented in the future. This will provide tax authorities with real-time information about business transactions.

Allowing the tax authorities to validate and verify invoices helps businesses ensure compliance by accounting for tax properly.

Enhancing ERP systems security

The US electronic exchange network uses AS2/AS4 communication protocols, which guarantee financial data security. These protocols help US electronic delivery network users secure files with encryption (optional) and digital signatures.

Integrating ERP systems with the DBNAlliance helps providers understand the security protocols to prevent data loss or interception. ERP users can also better control their data and access to business-critical information.

The AS4 protocol is a continued development of the AS2. However, it has not yet been widely adopted by most ERP providers. The exchange framework allows interoperability by including protocols for developed and less developed technologies.

Improving compliance for your clients

Most countries turn to electronic invoicing to improve tax compliance and reduce the VAT gap. This gap is caused by fraud and bankruptcy, resulting in a lower amount of VAT collected.

Integrating with the DBNAlliance helps ERP providers understand the exchange framework's requirements, allowing them to update their systems accordingly.

This helps businesses simplify tax reporting, improve overall data security, and reduce non-compliance risk.

See more: Connecting to the U.S. Open Exchange Network (DBNAlliance): Benefits for ERP Systems.

Takeaway: Provide quality ERP systems through integration with the DBNAlliance

As e-invoicing grows in the US, ERP providers can offer higher-quality services by integrating with the DBNAlliance. This allows them to understand better how the framework works and which adjustments to make to improve their ERPs.

Business owners will likely turn to more efficient ERPs when transmitting e-invoices. Joining the US open exchange network is a no-brainer, as it will enhance business operations and allow seamless interstate transactions.

If you want to keep up with your competition by adopting electronic invoicing, Storecove can help. We help ensure companies issue and receive compliant e-invoices in the US.

More information about the Digital Business Network Alliance?

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