Implementing mandatory electronic invoicing in the US faces various challenges, including the lack of a centralized e-invoicing platform. The country has over 250 e-invoicing providers and 15 formats throughout all the states.
This has made the e-invoicing environment in the country intricate, but with the introduction of the Digital Business Networks Alliance (DBNAlliance), things have taken a turn for the better.
The DBNAlliance is a non-profit organization born from the collaboration between the BPC (Business Payments Coalition) and the Federal Reserve Financial Services.
It has unveiled an exchange framework that will allow businesses in the US to exchange e-invoices despite their underlying technology.
This article will discuss the Digital Business Networks Alliance (DBNAlliance), the e-invoicing model used in its framework, and how ERP systems can benefit from connecting to it.
Overview of Digital Business Networks Alliance (DBNAlliance)
The DBNAlliance began operation in 2023 when the BPC E-invoice Exchange Market and Federal Reserve Financial Services participants formed a legal entity to oversee the new electronic exchange network.
Based on various technical standards and policies, this electronic delivery network helps improve the exchange and processing of B2B (Business-to-Business) payment information.
This network allows all businesses to transmit and receive invoices securely. Its main aim is to bridge the gap between the platforms and systems most businesses in the US use.
Let’s look at an overview of the DBNAlliance, including tasks, format, and other critical information:
Tasks
The DBNAlliance is expected to ensure the e-invoicing network adheres to US policies, standards, and regulations for B2B e-invoice transmission.
Format
The e-invoicing network the DBNAlliance oversees uses the OASIS1 UBL format. This format simplifies the automation of electronic invoicing through the XML language and is popular in countries such as Croatia and Montenegro.
The UBL format standardization simplifies information and data management. It includes standard invoice details such as shipping information, buyer and supplier details, applicable tax details, and payment details.
Membership
Businesses can join the exchange framework through certified DBNAlliance service providers such as Storecove. The DBNAlliance certifies and enrolls access point service providers in its network to provide greater chain supply engagement for businesses.
Archiving
Businesses must store their e-invoices, including the tax return filing, for at least 7 years.
Unique identification number
The DBNAlliance requires businesses issuing electronic invoices through the platform to generate an IRN (Invoice Reference Number) and include it in the invoice’s subject line.
The recipients are only required to provide the sellers with a valid email address or an effective web-based system where the invoice can be uploaded or sent.
Digital signature
Every invoice issued must have a digital signature to help verify and authenticate the sender. This enhances the overall security of the e-invoicing platform.
Payment methods supported
The DBN Alliance supports several payment methods, facilitating smooth business transactions. These including:
- Automated Clearing House (ACH)
- Wire transfers
- Instant payments
- Card payments
Read more: The Rise and Role of the Digital Business Network Alliance.
What is the BPC E-invoice Exchange Market pilot project?
The BPC E-invoice Exchange Market pilot program is an e-invoicing platform implemented in three phases in the US. After its implementation, the participants, in combination with the Federal Reserve Financial Services, formed the DBNAlliance to oversee it.
Here are the three phases of the pilot project implementation:
- Stage one- 1 April to 30 June 2022: During the initial set-up stage, the BPC set the details of the exchange framework, including the rules and specifications, to make the e-invoicing process possible.
- Stage two- July 2022 to 30 September 2022: The second stage, also known as the implementation stage, involved starting to use the platform. Businesses could transmit e-invoices, allowing evaluation of the process in the real world.
- Stage three: 1 October 2022 to 31 December 2022: This phase solely focused on increasing the platform's use, allowing the transmission of a large number of e-invoices. The project pilot was so successful that it was set to be available to all American businesses by 2024.
You may also like: The Future of E-Invoicing in the U.S.: Trends and Regulations Shaping the Landscape.
What is the e-invoicing model used in the exchange framework?
Like PEPPOL, the DBNAlliance exchange framework used in the US uses a four-corner model. Every transaction involves two access points that help businesses ensure invoices are issued and received according to the established standards and formats.
The exchange framework uses secure AS2 (Applicable Statement 2)/AS4 (Applicable Statement 4) channels, which are reliable and guarantee effective security measures.
Here’s a breakdown of the four-corner e-invoicing model:
- Supplier (Sender): The supplier generates the electronic document using their own ERP system or accounting system. Every e-invoice has to adhere to the set standards and regulations, and the next key player in the model helps ensure this.
- Supplier’s access point provider: The supplier’s access point provider receives the electronic document and verifies its details and compliance. Access point service providers are critical in supporting e-invoicing, regardless of the technology or system a business uses for generation.
- Buyer’s access point provider: The buyer’s access point provider is similar to the supplier’s, except that they ensure the document is compatible with the buyer’s system. A reliable access point provider like Storecove ensures the document is standardized for the recipient. Storecove has gained its reputation as a dependable service provider as it was the first to receive an invoice sent in the US.
- Buyer (Recipient): The buyer is the last key player in the four-corner model exchange framework. They receive the e-invoice from their access point provider and process it using their ERP system before making payment.
What are the benefits of connecting to the U.S. open exchange network for ERP systems?
Connecting your business ERP system to the U.S. open e-invoicing exchange network offers numerous benefits to your organization. They include:
Overcomes interoperability issues
Compatibility of e-invoicing systems has long been a challenge for businesses in the US. It hinders interstate transactions, making it challenging for businesses to conduct transactions with companies using different e-invoicing systems.
The DBNAlliance aims to eliminate this challenge by offering a platform allowing businesses to exchange invoices regardless of their technology.
Using reliable e-invoicing service providers will help businesses issue compliant e-invoices without altering or upgrading their current electronic invoicing systems.
Retains your centralized invoice capture
Despite connecting to the U.S. open exchange network, businesses will still generate invoices using their regular ERP systems. This makes it easier to onboard employees with the new invoicing system.
The ERP system you use to deliver data virtually will remain relevant. It will still collect data from your centralized database in various departments and include it in your electronic supply chain documents.
Reduces investment and implementation costs
When implementing e-invoicing in most countries, businesses must invest in new systems that comply with the set e-invoicing regulations.
However, the DBNAlliance aims to allow interoperability of different e-invoicing systems used by most businesses in the US. Introducing access point service providers enables business owners to generate compliant e-invoices using their current technology.
The requirements for e-invoicing in the US, such as the UBL format, are easily achievable. Most systems can generate invoices in UBL, which is popular in global e-invoicing.
Complies with national electronic delivery standards
When connected to the U.S. open electronic delivery exchange network, businesses must have a validated access point service provider to help ensure invoices from different systems adhere to the regulations even without business owners realizing it.
These access point service providers are essential in ensuring that all electronic business documents meet standards. They verify the details and check the digital signature and IRN before issuing the e-invoice to the recipient.
Helps ensure tax compliance
The DBNAlliance's main aim is not to help ensure tax compliance. However, exchanging electronic invoices between businesses makes it easier for owners to keep up with their taxes.
The exchange framework outlines that every invoice must include the applicable tax details of every sale. This makes tax compliance more achievable, allowing businesses to avoid fines associated with tax evasion.
Increases security through the DBNAlliance e-invoicing exchange network
The digital business network alliance's framework is a highly secure exchange network that uses AS2/AS4 channels. These are specifications on how to transmit structured B2B data securely over the internet.
The messages are sent through the HTTP or HTTPS protocol, and security is achieved using a digital signature, encryption, or both.
AS file transfers also require both parties to trade X.509 certificates, enhancing transparency and further cementing the security of the invoicing processes.
See also: The Role of ERP Integration Services in Achieving E-Invoicing Compliance in the U.S.
Takeaway: Overcome e-invoicing interoperability issues with the U.S. open exchange network
The US is making massive progress towards implementing e-invoicing for B2B transactions. The open exchange network overseen by the DBNAlliance is one of its most recent achievements.
This non-profit organization is responsible for the exchange network that most businesses connect to to facilitate business transactions.
Connecting to the exchange framework offers businesses numerous advantages, including increased security of financial data exchange and compliance and helping companies to overcome interoperability challenges.
The DBNAlliance allows businesses to choose their desired access point service provider for the connection. This makes it easier to generate electronic documents that adhere to the requirements outlined by the organization.
Ready to join thousands of businesses in the US taking advantage of the e-invoicing framework? Contact Storecove today to get started!
More information about the Digital Business Network Alliance?
Contact us for more information or schedule a consult with one of our e-invoicing experts.
Read also:
- What is PEPPOL?
- What Is E-Invoicing Compliance? - A Detailed Guide
- The Rise and Role of the Digital Business Network Alliance
- Understanding US Invoice Requirements: A Comprehensive Guide
- Introducing Standardized Global Identifiers on the DBNAlliance Network
- The Role of ERP Integration Services in Achieving E-Invoicing Compliance in the U.S.
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