Tips to assess and plan global e-invoicing solution implementation based on SAP Document and Reporting Compliance
Many global companies doing digital transformation with S/4HANA would like to define in their strategies also a global approach for e-reporting and e-invoicing (electronic documents, eDocument/eDocs in SAP). This approach is needed to have one sustainable and scalable solution instead of multiple integrations with different tools and providers. E-invoicing is one of components of SAP Document and Report Compliance (DRC) as well as statutory reporting (former ACR). However, statutory reporting has a workaround in SAP represented by old reports. Workaround for DRC is a variety of other global and local providers offering their solutions integrable with SAP ERP or installed in SAP as add-on.
SAP DRC and global e-invoicing providers still do not cover every country and have a slight difference in their scope. For sure you can compare solutions suitable for your company working on your strategy and partner selection.
Having E2E experience with DRC e-invoicing implementation in several countries with complex legal requirements like Greece and Italy I would like to highlight points helpful to assess DRC solution and plan smooth and timely implementation of e-invoicing statutes:
- Countries covered by a solution.
DRC covers e-invoicing mandates in 35 countries all around the globe at the time when this article is written. SAP collaborates with local legislation experts to update solution with the latest changes timely and extend amount of supported countries. The Fig. 1 illustrates e-invoicing mandates released from year to year. You can check:
- Note 2530509 – eDocument Framework Troubleshooting Guide for country extensions available in DRC e-invoicing component in SAP.
- Help SAP page Supported Compliance Tasks by Country/Region for all scenarios (e-invoicing, e-reporting, statutory reporting, SAF-T) available in SAP DRC.
- Roadmap Explorer for future plans of SAP DRC extension with the new legal mandates
- Announcement of Legal Changes Service for planned SAP notes for the new legal mandates
- The newest information capabilities for SAP localizations are referenced in the article Confidently Global: SAP Localization Capabilities for Running a Successful International Business
Fig. 1. Release of e-invoicing mandates by local tax authorities.
- Implementation in countries not covered by the solution.
DRC has the capability of custom extension in “Extensibility for Electronic Document Processing” functionality both in ECC and S/4HANA. In this functionality you can develop custom logic for any new country within standard DRC components (Framework, AIF, Soamanger). Then deploy custom iFlows in the SAP Integration Suite (former SAP Cloud Platform Integration (CPI)) for integration with local Tax Offices and digital signature providers. Such an extension is used quite often for countries like Panama, Uruguay, Vietnam where SAP doesn’t provide local versions.
There are SAP partners who offer turnkey project with ready custom DRC solutions (extensions) for these countries. You can search for them in the internet or among certified solutions of SAP partners.
- Timeline for countries, where SAP is running.
Timelines in DRC for every country is different depending on complexity of local statutes. For example, SAP includes in its e-invoicing country specific presentations typical timelines:
- 6 month for e-invoicing mandates with unique local formats like Italy,
- 1,5 – 3 month for e-invoicing in Peppol Network countries like Germany, Belgium (Fig. 2).
These approximate timelines are given for the cases when SAP is already running in subject country, and basic DRC components and clouds are in place. They include implementation of local mandates i.e. generation of compliant unique local e-invoicing formats. Hence, there is no interdependency between timelines in different countries. For sure timeline may differ in every case depending on team maturity and scope.
Fig. 2. High level project timeline Peppol Network countries
- Timeline for countries, where you do first SAP roll-out.
In this case local processes in SAP are needed first to provide correct source documents for e-invoices. However, you can develop an efficient plan and start working on DRC technical part right after kick-off. These are eDocument Framework upgrade, if needed and regression testing (automated regression tester is planned by SAP) in running countries, implementation of a new country extension in eDocument Framework, deployment of new iFlows in the SAP Integration Suite, channel registration by local tax authority and digital signature provider, if needed.
- Go-live of e-invoicing solution.
E-invoices are reported in real time to provide:
- continuous transaction control for tax authorities
- communication with the business partners. You can send sales invoices to your customers and receive purchase invoices from your suppliers through the tax authorities. It depends on local legal mandate.
Just a few days can be given to submit each e-invoice. If the deadline is breached or e-invoices are not compliant, then risks of penalties and audits arise. It means, that e-invoicing solution should cover at least mainstream processes as of go-live and you need a plan of the prompt accomplishment.
Workarounds are hardly possible in many countries, because tax portals usually do not allow manual input and submission of this data.
- Skill sets.
DRC e-invoicing implementation itself is considered by SAP as a project where a whole project team with extensive technical, process and legal knowledge is needed: project lead, functional consultants FI, SD, MM (if inbound purchase scenarios are present), basis consultant, ABAP developer, DRC expert, Business and/or process team(s) to define scope, perform testing, and communicate with tax authorities (Fig. 2).
- Daily support of e-invoicing solution.
DRC has a multicomponent architecture with several deployment models (Fig. 3), where every component and aspect needs a support:
- SAP ERP and DRC (support of business processes to generate source documents)
- Integration (e.g. updated of certificates in SAP Integration Suite)
- errors returned by local tax authorities. E.g. tax authority portal validated your e-invoice and identified there prohibited objects or wrong values. For example, e-invoice contains prohibited combination of VAT code and local e-invoice type or VAT amount does not match to percent rate or VAT gross and net amounts (update of mapping parameters or extensions is needed)
Fig. 3. SAP DRC components and deployment models.
- Connection to e-invoicing and e-reporting platforms.
SAP DRC aims to reduce amount of intermediate providers. When it is allowed by local legal mandate, DRC E2E solution is supposed to have direct connection between SAP Integration Suite and local tax platforms. It means, that you should take care about registration of the productive and test channels with the local tax platforms and digital signature providers. The registration process can take time to fill out required forms, digitally sign them, get an approval from a tax office. Interoperability test between your solution and tax platform through test channel may be needed in some countries to pass to production.
DRC allows to use services from other providers instead of SAP Integration Suite. In this case the back end SAP ERP system acts as e-invoice XML Generation solution which still have to generate fully compliant e-invoices.
SAP DRC cloud edition used in countries with Peppol Network is equipped with its own Peppol Access Point. You can find more information about SAP Document and Reporting Compliance, cloud edition here.
Architecture of providers offering complete alternative to DRC may require files in single general format pulled from SAP into their cloud. General files are converted in local formats in the cloud.
- Implementation of changes in e-invoicing mandates.
These mandates are known for the high change frequency. The Fig. 1 illustrates release of the new mandates. Implementation of the new changes may require the same skill sets as the initial implementation. Typical path of e-invoicing mandate extension is
- initially only B2G sales.
- extension to submit also B2B sales e-invoices. However, in this case you also begin to receive purchase B2B e-invoices from your suppliers.
- extension to submit import and export invoices, B2C, etc.
Full clearance is achieved in the end when all invoices are in the scope. That’s the journey accomplished in Italy. Other countries are at different stages of this digitalization journey and planning to accomplish it as well. You need to account it in your strategy.
- Integrations with Account Payable invoices solutions.
This point comes from inbound purchase e-invoices mandate. That’s where SAP is offering automatic posting of Account Payable invoices through integration with
- Incoming Invoice Automation Solution
DRC e-invoicing has advantage of a standard integration with Vendor Invoice Management by OpenText (VIM) to automate posting of supplier invoices. As well DRC e-invoicing can be integrated with SAP Central Invoice Management on the cloud side. Integration with alternative inbound invoice management solutions is also possible.
- ARIBA (SAP Business Network)
Integration of DRC e-invoicing with ARIBA is planned. Note that it’s already available for Peppol countries like Germany. See DRC documentation.
- Concur Invoice
Integration of DRC with Concur Invoice is planned in Japan, i.e. Concur Invoice will receive invoices through the Peppol Network.
- Integration with Travel and Expense tools.
If submission of travel expenses is included in e-invoicing mandate as the part of Account Payable side, then I would advise to cross check your T&E processes with the requirements of the mandate. Are source documents without vendor item (bills from shops) supported by e-invoicing solution in particular country, is aggregated posting of these bills allowed to generate one e-invoice. Probably some adjustments are needed in in your T&E tool to fulfill local requirements or extensions in DRC.
- Licenses and charges.
This topic should be discussed with your SAP sales representative. In general SAP notes and documentation mention:
- SAP DRC on-premise needs license for Application Interface Framework (AIF), where XML is generated,
- Accordingly 3138432 – Document Compliance: Confirm Existing Entitlement with Activation of Business Function you can use e-invoicing functionality in SAP within DRC license or older DC (Document Compliance) license,
- The subscription to the SAP Integration Suite (former CPI cloud),
- The subscription to Peppol Exchange Service for the Cloud Edition of SAP DRC (mandatory for Peppol countries),
- charges for submitted e-invoices.
- Sources of information
SAP managed to create fantastic DRC communities and sources of information to ease implementation and support:
- Work Zone (former SAP Jam) with forums and presentations for every country,
- SAP blogs like this,
- SAP DRC Summits and e-learning sessions,
- Troubleshooting Guides for every country in SAP notes,
- Other sources of information in SAP ecosystem
- DRC as native tool of SAP has outstanding user experience.
DRC has many user-friendly advantages delivering amazing user experiences and audit trail. It is fully integrated with business processes. For example, you can reach out e-invoice directly from the source FI/SD/MM documents. Vice versa you can drill down into the source document from the eDocument cockpit. it provides real-time, seamless and accurate data processing, monitoring, corrections and full traceability of e-invoices life cycle. There is flexibility in the user interface Cockpit, where you can add some fields with a customization and any field with an extension, etc.
However, other providers of e-invoicing solutions also may have SAP add-ons with similar functionality.
These are all points which came to my mind at the time of writing these article. I summarized my experience of solution selection processes and DRC implementations. I hope it will be helpful in your digitalization journey to select, design and implement sustainable and scalable solution fulfilling your requirements. Please do not hesitate to comment and share your experience and thoughts on this topic.
PS. To provide better Information Technology experience to my readers I decided also to check an answer of ChatGPT free version to this question:
How to assess e-invoicing solution SAP Document and Report Compliance and plan its global implementation?
And here is the answer which actually looks quite general, but still good to me:
Assessing and planning the global implementation of an e-invoicing solution like SAP Document and Report Compliance involves several steps. Here’s a general guide to help you get started:
- Define the objectives: Determine the specific goals and requirements for implementing the e-invoicing solution. Understand why you need it, what problems it should solve, and what benefits it should bring to your organization.
- Conduct a current state assessment: Evaluate your existing invoicing processes, systems, and infrastructure. Identify any gaps or shortcomings in your current setup that the e-invoicing solution should address. Consider factors such as the volume of invoices, geographical locations, regulatory compliance requirements, and integration with existing SAP systems.
- Research and evaluate SAP Document and Report Compliance: Gather information about SAP Document and Report Compliance, its features, capabilities, and compatibility with your existing SAP landscape. Understand how it handles e-invoicing compliance with global tax regulations, supports digital signatures, ensures data integrity, and provides reporting and analytics capabilities.
- Consider regional and local regulations: E-invoicing compliance requirements can vary from country to country. Investigate the specific regulations in the regions where your organization operates or plans to expand. Ensure that the solution can meet the legal and tax requirements of each jurisdiction.
- Assess scalability and integration: Evaluate the scalability of the e-invoicing solution to accommodate your organization’s future growth and increasing invoice volumes. Consider how it integrates with your existing SAP systems, such as ERP (Enterprise Resource Planning) and financial management systems, to ensure a seamless end-to-end process.
- Engage stakeholders: Involve key stakeholders, including finance, IT, tax, and legal teams, throughout the assessment and planning process. Gather their input, understand their requirements, and address any concerns they may have. Consider involving external experts or consultants with experience in e-invoicing and SAP implementations.
- Create an implementation plan: Develop a detailed plan that outlines the steps, timelines, and resources required for the global implementation of the e-invoicing solution. Consider factors such as data migration, system configuration, integration testing, user training, and change management.
- Pilot and test: Before rolling out the solution globally, conduct pilot tests in selected regions or business units to ensure its functionality, performance, and compliance with local regulations. Gather feedback and make necessary adjustments based on the pilot results.
- Implement and monitor: Execute the implementation plan in a phased manner, considering regional or business unit-wise rollouts. Monitor the implementation closely, addressing any issues or challenges that arise. Establish performance metrics to track the solution’s effectiveness and measure its impact on efficiency, cost savings, and compliance.
- Provide training and support: Offer comprehensive training programs to users who will be involved in the e-invoicing process. Provide ongoing support to address any questions or issues that arise post-implementation.
Remember that the specific implementation process and requirements may vary based on your organization’s unique circumstances. It’s recommended to consult with SAP experts, implementation partners, or experienced consultants to ensure a successful global implementation of SAP Document and Report Compliance.
by Mikhail Smirnov