Significance of invoice data for factoring

E-invoicing ensures the availability of structured invoice data.

Invoice data contains the widest structured data throughout the purchase-to-pay/order-to-cash process: both payments and financing can be concluded using invoice data.

The datasets generated during an economic transaction can be summarized as shown below:

Figure 1: Datasets in the purchase-to-pay process

If structured invoice data is available then it can be used throughout the digital financing process, as it has all data that is necessary for invoice factoring, such as:

  1. Supplier and buyer data
  2. Invoice amount
  3. Payment terms
  4. Payment means (necessary bank account number, etc.)

Additional documents necessary for the factoring process

To complete a factoring process further documents are/can be necessary for addition to the invoices and invoice data:

  • Signed contract for the transaction
  • Certificate of performance (proof of accepting the performance of the supplier)
  • Certain financial data of the enterprise (historical P&L, balance sheets, general ledgers, outstanding receivables, and suppliers)

Some of these documents and lists can also be managed in a fully digital format as it is shown below:

Figure 2: Datasets in the purchase-to-pay process

As a consequence of managing all data in the financing process digitally, the financing process can also be “digital-only”.

How can a factoring company have access to structured invoice data?

If companies are obliged to issue e-invoices or are subject to continuous transaction control from the tax authorities then these companies’ software providers must have an invoice in an XML/JSON format, therefore the invoices are available in a standardized structured data format. Therefore, if the companies give access to their invoice data for the factoring company, then data of these invoices can be used for the financing process.

If companies are not obliged to issue e-invoices/provide invoice data for continuous transaction control then invoice data can be shared with the factoring system via APIs with systems integration. In a certain market, there should be an individual assessment which online invoicing service providers to integrate with. 

In certain cases, it makes sense to provide an online invoicing solution by the factoring company itself. In this way, access to invoice data can be ensured because it is already in the system and can be shared with the factoring system via APIs with an internal integration.

 

If you’re interested to learn more, download the White Paper on that topic