Providing value added services for SMEs by the banks: E-invoicing


Partner HUB from Hungary presented its e-invoicing platform during our CEE18 SME Banking Club Conference in Warsaw last October. The Platform can be integrated into internet banking system. We asked Katalin Kauzli (Business Development Director at Partner HUB) and Peter Malaczko (CEO at Partner HUB) to share more details.

Katalin Kauzli (Business Development Director at Partner HUB) speaking at the CEE SME Banking Club Conference 2018 in Warsaw

Banks are increasingly looking for new ways to increase (or maintain) their added value for their customers. We see more and more banks announcing their collaboration with third-party providers to integrate e-invoicing, accounting, and financial management services to better support the needs of small businesses. E-invoicing has become a hot topic with PSD2 and instant payments coming into force: by providing invoice-related services, the bank can leverage its regulatory compliance efforts to innovation opportunities: invoice processing and payments  – until now two separate administration processes – can now be connected and integrated within the internet bank.

Peter Malaczko, CEO at Partner HUB
Katalin Kauzli, Business Development Director

“The solution we introduce below is different from other instances of third-party cooperation in a way that enables the bank to become an e-invoicing service provider”, – Katalin says.

Partner HUB has developed a turnkey white label solution for banks to provide invoice related services for SME customers called Charlie-India Invoice HUB. The company is based in Budapest, Hungary. The team has 10+ years of experience in developing invoicing systems for both SMEs and large corporates. Partner HUB has completed a successful project with OTP Bank and is implementing its second banking project in Hungary. Its mission is to include SMEs into interoperable e-invoicing, developing a solution which enables invoicing service providers – first of all banks – to provide digital invoice-related services for their SME clients. Partner HUB believes that banks can strongly contribute to onboard SMEs into the interoperable e-invoicing space, while easing their administration burden, providing an outstanding payment experience and the option to build new services using digital invoice data.

 Adding value for the SME segment: More than 90% of all invoices worldwide are still processed manually and the penetration of e-invoicing is the lowest in the SME segment. The underlying reason is that automatic receipt and processing of e-invoices is not solved due to the lack of invoicing interoperability. SMEs must use various systems (invoicing software, e-mail attachments and invoice portals of large service providers) each month to manage their outgoing and incoming invoices. Using this approach, even e-invoices are processed as paper invoices, because SMEs do not have the resources to digest various e-invoice data structures, as this would require several IT integration projects. Banks providing interoperable e-invoicing services will naturally become integration hubs for invoice data structures, as they have access to a huge number of SMEs. Once a bank starts an e-invoicing service, third-party invoicing, accounting and ERP systems providers will integrate with the bank and contribute to the growth of the interoperable e-invoicing network.

Interoperable invoicing integrated into the internet bank will give SMEs the convenience of having a single digital invoice inbox and a 1-click invoice payment experience without the hassle of entering supplier invoice data. Furthermore, payment transactions and invoice data can be matched automatically, which saves a lot of time on accounting. The introduction of e-invoicing saves approximately 60-80% on invoice processing costs compared to paper-based invoice management.

The key to high penetration is simplicity and data exchange enabling in an open invoicing network: The success factor for onboarding SMEs into e-invoicing is to provide an e-invoicing service, which is very simple to adapt to SME needs, while providing the technology background for a seamless electronic invoice data exchange with other invoicing service providers. In our envisioned market model, each bank as a service provider provides invoice-related services tailored to its customers’ needs under its own brand, but these enable data exchange between SMEs for sending and receiving invoice data.

Additional value for the bank from invoice data assets:

Invoice-related services open new revenue streams and cost saving opportunities for banks, giving them access to business transaction level data:

  • tailor-made and well-timed financing offers can be made, as the cash flow of the company can be forecasted based on outgoing and incoming invoice data,
  • a cash-flow projection tool can be offered to SMEs, which always struggle with liquidity issues
  • credit scoring models can be based on real-time business transaction data instead of annual financial reports
  • invoice financing (factoring, working capital or supply chain or export financing) service processes can be digitized based on invoice data

 Turn regulatory obligations into business opportunities with e-invoicing: PSD2 obliges banks to open their interfaces and provide banking information to third-party providers, which increases competition in payment services and forces banks to provide value added services to SMEs and corporations. Instant payments turn invoicing into a natural add-on service, as the invoice is in fact a request-to-pay: if there is an e-invoice available, a request-to-pay can be generated automatically from the invoice. If the bank provides invoice receipt services and the invoice can be paid conveniently (i.e. the payment transfer is generated automatically from the invoice), the payment transaction will stay at the bank and prevents it from being sent to third-party payment providers even after the start of PSD2.

Charlie India Invoice HUB for banks

Invoice HUB for banks is an 80% ready-made white label software product, which can be integrated into the internet bank to provide invoice-related services.

  1. It has complete functionality for customer and supplier invoice management
  2. It ensures easy integration with the bank’s payment system; embedded payment features include:
    1. 1-click supplier invoice payment generated from invoice data
    2. matching invoice data with payment data
  3. The solution has all the required back office functions (registration, subscription management and authentication) to launch an online e-invoicing service.

The product has been specifically designed to meet banks’ needs while complying with all banking IT security and architecture requirements. The bank can customize the ready-made functionality based on its individual needs: new processes can be built up in the system that are compatible with existing processes in the bank.

“We have been working to minimize implementation efforts and risk on the bank’s side both in IT and product development. There is an opportunity for prototyping, which happens on a dedicated system online for each bank, guided with personal consultations from our side. The prototyping process may be completed within 8-12 weeks together with banking integrations. The result of a prototyping project is a fully functioning MVP solution that can be launched for user acceptance tests.”

Case Study: OTP eBIZ

“OTP Bank Plc was our very first banking client. The service was launched in March 2017, following a prototyping project and an 8-month implementation period. Since then we have been in close cooperation with them developing both business concepts and IT requirements for building an interoperable e-invoicing network”, – Peter says.

 OTP eBiz is a digital financial assistant for SMEs, providing services that help SMEs manage their financial administration and cash flow management digitally. These services include invoice-related services (issuing and sending invoices), a financial dashboard for revenues and cost categories, estimation of payable taxes and a cash flow forecast based on invoice data. The solution serves as a co-working digital platform for all participants of the SME’s financial administration processes, enabling SMEs to move from paper-based to digital processes. The system is connected to the bank’s OTP transaction system through a banking middleware system to enable direct transfer payments initiated in OTP eBiz. In addition to payment services, the solution enables clients to see which invoices have been paid in their internet bank and send reminders for payments due.

The Charlie-India platform is the backend for the OTP eBiz solution. This means that all features are serviced by the Charlie-India platform: the platform’s capabilities were used to set-up registration, master data management and document management functions. OTP eBIZ implemented the banking middleware integration for payment services, the subscription management system and the customization of invoicing processes defined by business requirements. Use of the Charlie-India platform decreased time-to-market significantly.

Open and connected invoicing network enables the bank to become a data and payment hub

Invoices may be generated and delivered within the OTP eBIZ solution electronically among their users, together with accompanying invoice data in a standardized structure that enables automatic processing of invoice data with integrated ERP systems, as well as matching invoice and payment data.

However, the same invoice delivery applies to all other invoice networks serviced by Charlie-India. This means that users of other Charlie-India based invoice networks may deliver their invoices on a peer-to-peer basis with the same data compatibility – even though invoice structures may vary among individual users. For example, Budapest Sewage Works (a utility company) is able to present its invoices within the OTP eBIZ system to its SME customers, where they can be approved and paid with a single click. Invoices are stored on the platform to comply with tax regulations. Integrated ERP providers may process invoice data automatically, making manual input of invoice data unnecessary. The structured invoice data may be used by the SME for accounting purposes and serves as an input to the system’s cash flow forecast.

Having the invoice on the platform and a seamless payment experience (1-click payment) ensures that the business payment happens on the bank’s platform with a direct debit transfer and not through a third-party payment provider. For invoices delivered outside the platform, a 1-click card payment link is placed on the invoice, with the bank being the payment service provider. This way the bank retains the payment transaction and realizes a higher margin on the payment transaction as if it had to rely on third-party payment service providers.

Furthermore, the bank may use the invoice data to provide well-timed and tailor-made financing offers to SMEs based on the cash-flow projection derived from both issued and received invoices and other historical costs (wages, taxes, etc.). Having invoice data contributes to a complete financial picture about the enterprise, which enables the bank to build its scoring model on business transaction data, not only payment data. This will lead to more precise scoring models and result in lower risk cost at the bank and lower financing cost for the SME. Thus, the invoicing HUB solution not only helps SMEs to do their business administration more effectively, but also creates an ecosystem with banks, enterprises, SMEs and different ERP service providers.


Source: SME Banking Club,