Paul Rohan, AIB

7 Apr 2011

The importance of setting standards.

AIB’s Paul Rohan believes the EU will achieve its target of e-invoicing becoming standard by 2020.

The EU wants e-invoicing to become the predominant method for businesses to invoice by 2020. I personally believe the EU will achieve this ambition by replicating the sequence we have seen for EU standard setting on Single European Payments Area (SEPA) payments. To quote EU internal market commissioner Michel Barnier: “As an invoice precedes the payment in any purchasing transaction, there is also a strong link with SEPA. SEPA aims at integrating and standardising electronic payments across the EU. SEPA and further standardisation of e-invoicing, therefore, have mutually reinforcing benefits.” We can expect some steps in this direction in 2011, when the EU Commission will propose a revision of the e-signature directive to provide cross-border recognition of secure e-authentication systems.

In a 2020 time horizon, I have a personal view that this EU e-invoice standard setting will result in EU banks beginning to electronically process their business customers’ invoices, as well as handle the resulting payments. I see this prominent role for banks because the EU Commission and the European Central Bank can force EU banks to adopt common and interoperable EU standards. The regulatory authorities do not have the same influence over standard setting by e-invoicing firms from the private sector who are seeking competitive advantage from proprietary e-invoicing solutions.

For example, in this 2020 scenario, EU clearing banks could have EU-standard electronic processes to securely pull information about approved credit sales from their customers’ electronic ledgers. The electronic ledger periodically and electronically tells the bank who owes money and when it is due. The bank subsequently issues electronic invoices to its customers’ debtors. At the due date, the bank electronically pulls the cash owed from the debtors’ bank accounts, using a single SEPA scheme.