B2C einvoicing in Estonia

1
B2C e-invoicing in Estonia

• Ahti Allikas
• Itella AS
• 25. May 2005
• Tallinn

2
Itella Group

• Eight countries (Finland, Sweden, Denmark,
  Norway, Germany, Estonia, Latvia, Lithuania)
• Part of Finland Post Corporation
• 1400 employees
• In Estonia
• Founded 1997
• 40 employees

3
Field of business

• Invoicing services
• Invoice delivery
• Paper invoices
• E-Invoices into internet banks, EBP-s and
  e-mails
• Direct Debit
• In co-operation with five bigger banks in
  Estonia
• E-archiving
• Direct Marketing
• With the invoice
• On the invoice

4
Estonia in General

• Population 1 350 000
• No of households 580 000
• No of enterprises 60 000
• ID card 30 of population
• Mobile penetration 60 of population
• Internet 44 of population
• Coverage Area
• Public Sector 100
• Schools 98
• Private sector 78
• Households 24
• (statistic August 2004)

5
Invoicing / Payment related figures (March 2005)

• No of Banking Cards 1 311 160 / 80 active
• No of Internet Bank contracts 900 000 / 66 of
  population
• No of Payment Orders incl DD 6 817 000
• No of DD transactions 1 009 800
• payment orders of private persons 3 000 000
• No of Invoices in month appr. 4 200 000
• appr. 60 B2C
• 4,3 invoices per household

6
Rules on e-invoicing in EU 2001/115/EC

• Taxation information is regulated
• Intra-country e-invoicing is regulated by local
  authorities, EU regulates e-invoicing within EU
• Obligatory elements of the invoice are determined
• The storage is regulated
• Two ways to send and receive e-invoices if the
  authenticity and integrity is guaranteed
• with AES according to directive 1999/93/EC
• in sense of EDI according to directive 1994/820/EC

7
Rules on e-invoicing in Estonia

• E-invoicing is allowed
• Invoice delivery method is agreed between issuer
  and receiver
• In general there are same conditions for
  e-invoicing as for paper invoicing
• No need for signature
• You should store an invoice for 7 years
• You should store the invoice as youve received
  it
• Obligatory fields as determined in Council
  Directive 2001/ 115/ EC

8
Standardization of e-invoicing in Estonia

• Mainly on the B2C direction
• Great amount of consumer delivery channels
  (internet banking, EBP, email, self-service www
  portal)
• For consumer it is easy to sign up
• Convenient to use (especially with Direct Debit)
• Weve strictly followed the logic - It is
  important to separate document and the
  transportation
• In B2B side there is a need for automated
  processing
• In March 2004 there was agreed e-invoice standard
  format in XML
• Containing all necessary fields according to
  legislation
• Containing standardized payment information block
• Containing standardized commercial context
• We look a way to realize it
• Very little implementation on the field of EDI

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Current situation

• Transportation
• There are realized relatively big amount of
  delivery channels in order to satisfy the needs
  of different consumers. In case of B2B there is
  still lot to do.
• Subscription
• Consumer has enough possibilities to subscribe
  for e-invoices, the need of SME-s is not covered
  yet
• Usage
• Consumer needs are mainly covered (storage and
  payment), automated processing (B2B) is still in
  the beginning
• Integration with current systems
• Low

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B2C e-invoice figures in Estonia

• Invoices in one month in average

First four months Prognosis
11
Penetration success stories

• Highest penetration is approximately 22
• By the field of business
• Telecom companies
• Petrol and energy companies
• Leasing companies
• Security companies
• Insurance companies
• others

12
Different delivery channels for B2C e-invoice

• E-mail
• Plain or signed (99 not signed)
• as an attachment or body (75-80 has PDF
  attachment)
• Internet Banks
• connection with payment (possible to change due
  date)
• download or store at your bank system (for 13
  months)
• HTML and PDF format
• Utilities WWW self services
• download or store at the utilities place, limited
  timeframe
• Usually PDF or HTML format
• as additional or only channel
• EBPP portal
• download or store
• PDF format

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B2C e-invoices in different channels

• As of today
• Internet Banks 52
• E-mail attachment 29
• Self-service Portals 15
• EBPP 4
• In the future
• Decreasing self-service portals
• Growing importance of internet bank and e-mail
• e-invoice gtgt m-invoice
• Alternative channels like Digital TV

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Who is sending B2C e-invoices in Estonia?

• Ca 35 biggest B2C invoice issuers
• Telecom companies
• Petrol and energy companies
• Leasing companies
• Security companies
• Insurance companies
• Carbage collectors
• 1 is not using e-mail as channel
• 22 are using internet banks as channel
• 22 are using EBP as channel
• 7 are using self service portal as channel

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Logic of B2C e-invoicing
Invoice Issuer
Invoice Receiver
Service Provider

• Decision on delivery is made by the receiver
• Issuer has a question - how to raise the
  penetration (eg how to influence Receiver to
  decide)?
• Service Provider can help

16
Consumer e-invoice ordering procedure
File from the Bank
e-mail to issuer
Link from the Bank
Link from the EBP
Call to issuer
E-invoice ordering information Consolidator /
Issuer
17
Ordering Process in different Channels

• Bank 1
• Possible to order either at Tellers site or in
  the internet bank
• Make an application by announcing your unique
  number at the issuer
• Bank sends the information via file
• Possible to order only into particular Bank
• Bank 2, 3, 4, 5
• You can order in the internet bank
• There is a link to the Consolidator or Issuer web
  page
• Correct unique id at the issuer is offered
• Possible to order only into particular Bank
• EBP
• There is a link to the Consolidator web page
• Correct unique id at the issuer is offered
• Possible to order into all channels
• Issuer
• Stores the information in own system
• Forwards the information to the consolidator
• Possible to order into all channels

18
Consumer e-invoice ordering procedure
File from the Bank
e-mail to issuer
Link from the Bank
Link from the EBP
Call to issuer
Sign up portal
E-invoice ordering information Consolidator /
Issuer
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What is www.arved.ee?

• Central non profitable web page where private
  person can
• Sign up for all the e-invoices with one mouse
  click and order them into the channel he/she
  likes
• Cancel all the e-invoices
• Sign up and change the way of delivery one by one
• Change different setting linked to the e-invoices
• Sign up for the e-invoices automatically in the
  future
• This is just a sign up portal not linked to any
  delivery channels
• Easy and Convenient to use
• One time authentication
• Spends the time approximately five minutes

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How does it work?

• Say NO to all your paper invoices with three
  mouse clicks

CHOOSE THE DELIVERY METHOD
AUTHETNICATE ID card Or internet bank

• User can Add, Change or Cancel his application
• Today only for private persons, no entrance fee
• Unique functionality - only one YES to all the
  Issuers who have joined and who will join the
  portal
• User gets an e-mail about the invoices which
  delivery channel was changed

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Campaign 21.02.2005 01.04.2005

• B2C e-invoices in Estonia as 21.02.05 ca 135 000
• B2C e-invoices in Estonia as 01.04.05 ca 185 000
• Growth ca 36
• Growth ca three time as big as usually within
  such a period
• e-invoices in www.arved.ee 14 378
• most popular channel e-mail
• most active age 25 - 40

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Maximizing the penetration
INVOICE RECEIVER
BANK
INVOICE ISSUER
23
Thank you, any questions?

• Ahti Allikas
• Itella AS
• e-mail ahti.allikas_at_itella.ee
• phone [phone]