In my last blog I discussed EDI and digital signature EU legislation compliance within the European economic zone. Whilst both EDI and digital signatures can provide compliance, I reminded everyone of the importance of ensuring that your e-Invoicing solution takes into account all the varying legal requirements in different countries.
In this blog, we will examine the differing levels of complexity involved in setting up EDI and digital signatures, and in the process of exchanging e-Invoices across each.
EDI has traditionally been the consensual method of e-Invoicing. EDI is renowned for being an industrial strength solution, capable of processing tens of thousands of electronic documents in a day so it is no surprise that this method was first used by larger companies. However, the strength of EDI is no longer the domain of large multinational corporations, and now small and medium-size enterprises have EDI solutions tailored for their needs.
There are three main types of network communications methods that EDI is traditionally implemented through: an EDI Network, Virtual Private Network (VPN) or point-to-point using a secure internet connection such as AS2. Most businesses choose to use an EDI network from a major provider because setting up the different communications methods requires careful attention to detail. For example, you must consider your company’s data processing capabilities as well as your commercial business needs. In most cases, interchange agreements are signed between the different partners in the trading relationship and the success of the EDI solution will ultimately depend on the quality of the software, the network and the support that the vendor provides.
Digital signatures have some degree of complexity involved in the exchange of documentation, but are less intensive to set-up. All that is required to set up digital signatures is a private key, public key and digital certificate. The only real challenge is obtaining and installing the certificate to sign invoice data securely. When exchanging documents, tax administrations often favour local Certificate Authorities (CAs) as an encryption method although stricter administrations may require fully qualified digital certificates with Secure Signature Creation Devices (SSCDs). The advantage of digital signatures over EDI is that they are flexible enough to be sent over a multitude of communications methods, including the internet, and they do not require a specific agreement between trading parties.
Implementing EDI or digital signatures does have complexity, therefore solution providers offer outsourced managed services that will remove this complexity for your business. From your company’s perspective, you will need to decide on which method benefits you best, both in the short and long term and whether you want to manage the complexity yourselves. You can learn more about all aspects of e-Invoicing at www.einvoicingbasics.co.uk.
