Streamlined+Invoicing+&+Payment

****DOMAIN****** /**CROSS-BORDER PROCUREMENT & FINANCE**/**FINANCE**/**INVOICING&PAYMENT** **


 * S **** treamlined Invoicing & Payment **

Prompt and full payment is the single most important trade factor for most commercial vendors. Payment time can be delayed or expedited depending upon the accuracy and completeness of the invoicing data provided by an invoice. This chapter sets out expedient methods for accomplishing both invoicing and payment.
 * Definitions & Scope **

// Invoicing is the documentation used to identify delivered products with their agreed upon consideration (payment). Invoice data is a recordation of the item, its price, the Trade Partners (buyer & vendor), shipping data and other information suitable for audit and tax support. //

// Payment is when the vendor/supplier receives compensation (usually monetary or credit) from the buyer. //

// Trade Partners, for purposes of this chapter, are third party (other than the buyer and the seller) commercial service providers contracted by the buyer and/or seller to expertly handle invoicing and payment //

This chapter addresses uniform invoicing processes, pro forma invoicing format, e-Invoicing & e-payment systems, invoice types & progress payments.

**Benefits** The methods for streamlining invoicing and payment in this chapter facilitate trade transactions in the following ways:
 * By safeguarding and enhancing the capacity for Retention of accessible Trade Data (required to be retained for three years after each transaction in most countries tax regions)
 * By improving the accuracy and completeness of data (using the UN/CEFACT 6, IFC & WTO recommendations for invoice content) can help guide vendors and their __Trade Partners__ for shipping, insurance, invoice and payment
 * By standardization of forms that can improve and understanding of the data needed for a transaction to clear shipping, customs and buyer inspection
 * By reducing processing time as a result of the improved recognition of data and
 * By enhancing management tools for tracking transaction status if the invoicing is linked to the purchase, shipping and acceptance stages.

The combined result of these benefits is faster delivery and payment, better “auditability” and incentive to increased trade.

In this millennium with universal application of e-systems, the invoicing process has become increasingly specialized, especially for transactions involving international commerce. Third party participants (any party other than the buyer and seller or “principles”) are frequently called upon to handle functions requiring special knowledge, established contact points and unique trade expertise. Invoicing is no exception. A niche has been created for Invoicing and also for Payment Service Providers (SPs) able to prepare, process and expedite cash flow from buyer to vendor. This is done with e-documentation that complies with the regulations of economic trade areas (such as the EU) and countries (EU members and non-members). Invoice SPs are given fiduciary responsibility by the buyer – and sometimes also the seller) for handling…
 * Processes & Participants **


 * Accuracy & Completeness of Product Specifications
 * Import/Export Licenses
 * Required invoice data (SEE Sample Invoice)
 * Customs requirements
 * Vendor credit and revenue accounts

They may also maintain vendor accounts receivable, currency conversions, VAT and income tax payments. Invoice SPs must process reimbursement of customs duties, insurance premiums and sometimes shipping charges – each of the other third party service providers who are financial stakeholders in the commercial transaction. As a result, the list of financial stakeholders from this section’s introduction expands to be… // international donor or lender organizations, // // collateral registry appraisers, // // credit bureaus, // // commercial bank guarantors, // // credit insurance providers, // // currency traders (conversion), // // local banks, // **// in //**// voice and payment service providers (SPs), // // shipping firms // // insurance providers for shipping & transit // // freight forwarders // // tax accountants // // freight expediters // // local transporters // // tax inspectors (invoice data), // // public sector tax & duty examiners and collectors, // // independent business auditors // // and the legal authority for collection of income tax //

While the vendor is assembling invoicing assistance, the buyer may be doing the same for payment – of the vendors invoice. If the buyer is using Self Billing as an expedient, then the buyer may contracts with SPs to handle payment as well as invoicing. And the responsibilities can be reversed if it is more expeditious for the vendor to handle payment draw down as well as the invoicing. An example of full vendor responsibility is fuel procurement. Because some or all of these stakeholders may be involved in a cross-border transaction, it is beneficial for each to look for invoicing and payment methods that:
 * involve simple, standard, multi-party acceptable invoice documentation such as was adopted by the EU in 2004
 * reduce the number of participants responsible for completing the invoice data input and
 * encourage pro forma e-invoicing and advance progress payments

**Contents** Expeditious methods for invoicing and payment are included in this chapter under:

Invoice Types and e-Invoicing – essentials of the EU directive on uniform invoicing content together with the UNCEFACT Rec #6 required invoice content

Pro Forma Invoices – benefits, application and sample

Prompt Payment Methods – includes special accounts and credit guarantees

Progress Payments – listing types of advance payments