Electronic invoicing is being rapidly adopted as a safe, secure, and convenient method of exchanging B2B and B2C invoices globally. While the e-invoicing system is gaining traction in the United States, no country-wide standardized system existed before 2022.
However, things changed in the early summer of 2023. The Business Payments Coalition (BPC) E-invoice Exchange Market Pilot members with the Federal Reserve launched a standardized e-invoicing system nationwide.
The Digital Business Network Alliance (DBNAlliance), a collaborative effort of the BPC and the Federal Reserve Financial Services, is a market-ready exchange framework based on technical standards and policies to allow businesses to exchange electronic invoices and supply chain documents safely.
The DNBAlliance is a legal entity regulating the electronic exchange network. It will be responsible for providing oversight over the e-invoicing system in the country.
The DNBAlliance aims to standardize the e-invoicing system so exchange of business-to-business invoices is smooth and seamless.
In this post, let’s talk about the inception and the role of the DNBAlliance in the exchange of standardized e-invoices in the United States across platforms and systems.
What is the DBNAlliance?
The DNBAlliance is a collaborative effort between the United States government and the private sector to standardize the e-invoicing system in the country. It is responsible for defining the electronic delivery network based on the policies, rules, guidelines, and standards for sharing business-to-business invoices in the United States.
The DNBAlliance offers memberships to assist businesses in connecting to the exchange framework through authorized access point providers.
Before the DNBAllaince, there was no standardized e-invoicing platform to exchange and process invoices between businesses in the United States, resulting in serious inefficiencies when communicating electronic documents between businesses.
The electronic network DNBAlliance aims to create is a four-corner model based on non-proprietary technical standards and policies. The exchange framework allows businesses to deliver data securely over a virtual network.
The alliance provides a streamlined approach for the buyers and all company supply chain members to exchange business documents and send and receive e-invoices.
The DNBAllaince network also allows the suppliers to supply standardized e-invoices, streamlining the invoice-to-cash process.
Check out our article, What Is An Electronic Invoice? - The Complete Guide To E-invoicing to learn more about the e-invoicing process.
The mission and role of the Digital Business Networks Alliance
The mission of the Digital Business Networks Alliance is to create an electronic delivery network that is based on standards and policies that allow a safe and secure exchange of information between businesses in the United States.
It was developed to solve businesses' difficulties while exchanging e-invoices and other supply chain documents. As an oversight entity, the DNBAlliance also governs the exchange framework.
The alliance aims to solve this issue by creating an exchange framework standardizing how businesses communicate and share information about their supply chain. The DNBAlliance outlines standards for the following-
- How to connect with other businesses
- What information to send
- How to deliver this information electronically
The Digital Business Networks Alliance is currently in the process of developing the technical specifications for the system.
The Electronic Exchange Network
The exchange network developed by the Digital Business Networks Alliance is a virtual electronic delivery network for securely exchanging invoices and other documents between businesses. It solves several issues businesses face due to the lack of a centralized system of sharing supply chain documents in the United States.
The exchange network outlines the standards and regulations allowing businesses to share information securely. Even if your business uses a different software than your customer, you can use the platform to communicate efficiently with a standardized protocol.
One of the most interesting features of the new electronic exchange network is the fact that it supports almost all electronic payment methods, including-
- Instant payments
- ACH and modernized electronic payments
- Wire transfers
- Card payments.
What e-invoicing model will be used in the Exchange Framework?
The exchange framework uses a Four-Corner Model, meaning the e-documents are received through an Access Point service provider that connects the network to the users. Once you are connected to the network through an Access Point, you can securely exchange electronic invoices and other electronic supply chain documents.
The communication protocols on the network are AS2/AS4. You can request documents and generate status responses with the system as well.
The Exchange Framework will work on e-invoices based on the popular OASIS UBL 2.X format. You will be able to have attachments and also sign the document electronically for added security.
Some of the fields on the e-invoice are:
- Name and address of the supplier(s)
- The shipping information
- Payment instructions and the banking or card details
- Discounts, taxes, and other pertinent information
- Description of the documents
- Special notes, if any.
The e-invoicing pilot project in the US
The Business Payments Coalition and the Federal Reserve Financial Services have been in talks to develop a robust Exchange Framework for quite some time. These efforts culminated in a pilot project that tested the viability of a centralized e-invoicing platform in the United States.
The pilot was implemented in the following three stages in the United States.
Phase 1 (April 1 to June 30, 2022)
During this stage, the aim was to set up the background of the centralized framework. A set of rules and specifications were developed for exchanging e-invoice documents.
Phase 2 (July 1 to September 30, 2022)
The next step was implementing the system in the real world and generating e-invoices.
Phase 3 (October 1 to December 31, 2022)
Lastly, the third and final stage focused on scaling up the use of e-invoices.
The pilot has been concluded and generated some encouraging results. The DNBAlliance is all set to launch the system to all businesses in the United States by 2024.
What benefits will the DBNAlliance’s Exchange Framework implementation bring?
The Exchange Framework is supposed to streamline the e-invoicing system of the United States by providing a centralized system similar to the PEPPOL system in Europe.
Here are some benefits that the Digital Business Networks Alliance will bring to the e-invoicing landscape of the country.
Implementing the Exchange Framework system will reduce the cost of processing business invoices. You will no longer have to print, mail, or store the physical copies of the invoices. Everything will be stored and managed from a central network that can be accessed anywhere.
Compliance across platforms is one of the biggest problems for businesses without a centralized e-invoicing system. With the introduction of DBNAlliance’s new electronic delivery exchange network, you will communicate safely and efficiently with your clients irrespective of their invoice systems and service provider.
The DBNA will bring standardization of invoice data. It will ensure that your invoices are accurate, reliable, and error-free.
The Exchange Network will bring a state-of-the-art security system that will ensure your data is safe and accessible anywhere around the globe.
Interoperability between DBNAlliance and PEPPOL
The DBNAlliance, much like the PEPPOL (Pan-European Public Procurement Online), aims to make it easy for businesses to exchange information, including invoices and supply chain documents.
While both networks aspire to streamline cross-border transactions, there are notable differences in their implementation and usage, particularly in countries that are part of the Common Transit Convention (CTC).
Compared to the PEPPOL network, established in 2008, the DBNAlliance was launched much more recently in 2023 to replicate the success of the former in the North American context.
Although the DNBAllaince draws inspiration from PEPPOL, there are key differences between the two in terms of the following:
PEPPOL operates on a four-corner model involving Access Points, Service Metadata Publishers (SMPs), Service Metadata Locators (SML), and participants. Access Points are the gateways for exchanging documents between trading partners, while SMPs and SML facilitate the discovery of relevant participants and their associated services.
DBNAlliance, on the other hand, adopts a similar architecture but with a different technical implementation. It leans heavily on enabling data exchange and interoperability among various software systems, ensuring seamless integration between trading partners.
Legal and regulatory compliance
Given that CTC countries adhere to a common customs transit procedure, businesses must comply with specific legal and regulatory requirements when exchanging documents electronically.
PEPPOL has gained widespread recognition within the EU and is aligned with European standards and regulations, making it a preferred choice for businesses operating solely within the EU or its associated countries.
DBNAlliance, however, provides a more flexible framework that can adapt to different countries' unique legal and regulatory requirements, including those within the CTC. The flexibility enables businesses to comply with local regulations while benefiting from electronic document exchange's advantages.
Network adoption and maturity
PEPPOL has existed for several years and has achieved significant adoption and maturity within the EU and associated countries. It boasts a well-established network of Access Point providers, Service Metadata Publishers, and Service Metadata Locators, ensuring reliable and efficient document exchange for businesses operating within this region.
Although DBNAlliance is a newer network, it is gradually gaining traction and expanding its network of participants and service providers within CTC countries.
Choosing between the networks in countries that accept both depends on several factors:
- Specific business requirements
- Geographic reach
- Industry standards
- Legal and regulatory compliance considerations
Consulting with industry experts like Storecove and other businesses in your sector can provide valuable insights to help you make an informed decision.
The DBNAlliance is poised to revolutionize e-invoicing in the US
Companies in the United States face process inefficiencies in issuing e-invoices due to the lack of a centralized system.
However, things are looking much better with the implementation of the DBNAllinace Exchange Network. The system is designed with similar features to the well-known PEPPOL network used in Europe.
The modern invoicing approach with the DBNAllinace Exchange Network will be pivotal in reducing costs associated with paper-based processes.
It is set to improve efficiency, accuracy, and overall productivity. With faster processing times and streamlined workflows, businesses will enjoy accelerated cash flow and enhanced financial management.
The increased accuracy and reduced risk of errors will also contribute to stronger business relationships and customer satisfaction.
Overall, implementing the DBNAllinace Exchange Network as a legal entity represents a significant step towards a more efficient, cost-effective, and environmentally friendly invoicing process for all stakeholders involved.
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