Finland uses AI in attempt to achieve one-hundred per cent eInvoicing

Finland is a best practice example of the future of eInvoicing. By introducing eInvoicing in the last decade, the Finnish State Treasury confirms that today, over ninety per cent of invoices are electronic, up from eight per cent in the early 2000’s. By utilising Artificial Intelligence (AI), Finland aims to achieve one-hundred per cent eInvoicing, and that invoices will not only be electronic but that they will be processed automatically too. Finland’s story illustrates the future of eInvoicing and that electronic invoicing is only the beginning of your CEF journey.

How did Finland introduce eInvoicing?

Over 15 years ago Finance Finland (former Finnish Banker’s Association) first designed and operationalised an accepted the Finnish eInvoice format. Finance Finland has earlier published standards for bank account statements and fixed forms for sending payments. Subsequently, large companies and the State Treasury of Finland asked the Finnish Bankers’ Association to design and maintain an eInvoicing format. The requesting stakeholders knew that if the Finnish Bankers’ Association developed the format, it would be available to all stakeholders (like payment standards, e.g. account statement in the past) and free of charge since it would be a state-run development and format.

The Association launched the first domestic standard eInvoicing format in 2003. The organisation’s form contained an electronic payment initiation (ePI) which is a simplified credit transfer including invoice and credit transfer data. Initially, the eInvoice format was planned to be compact, however additional and complex requirements surfaced after the form was published it 2007, making it a more detailed format than anticipated. Nevertheless, it launched, and by 2007 Finland had a B2C eInvoice solution.

What standard did Finland apply?

The Finnish Bankers’ Association developed an eInvoice standard, a standard set of terms and conditions (T&C), for the use of its extended format. Finnish companies found this national standard and framework to send B2B, B2G, and B2C eInvoices easy to use since it was a common framework for all stakeholders that amongst other things reduced administrative burdens. As Finland explained it, compared to a marketing department, which has different departments, e.g. business and corporate clients, the invoicing department of a firm only has one invoicing department and standardise invoicing simplifies the working process. Today, in Finland, the four-corner model is used between businesses and customers; whereas buyers and sellers can use their service providers, considering they require different or no all the same type of information.

Finland, as an eInvoicing pioneer, had to develop its format independently. You have the opportunity to utilise CEF eInvoicing services to guide you through the eInvoice implementation phase and how to find the best system for your needs to implement eInvoicing successfully.

The standardised Finnish format has been in existence for about ten years. Today, at the Finnish State Treasury, over ninety per cent of invoices are electronic. Finland achieved this high implementation success result by implementing eInvoicing instead of the Direct Debit system SEPA DD. Before SEPA, only eight per cent of the transaction were Direct Debit payments. However, most companies prefer to use the SEPA credit transfer process for eInvoicing as SEPA DD is an automatic withdrawal from the customer, which many customers perceive as unfavourable. Meanwhile, it requires the business to consider an eight-week cancellations period for customers meaning that each business has to keep a specific money supply.  SEPA credit transfer does not require the latter and, therefore, Finnish B2C stakeholders prefer an eInvoice.

What format does Finland use to apply this standard?

After the Finnish Bankers’ Association developed the eInvoice format, it has become the most used eInvoice format throughout Finland. Nevertheless, Tieto Finland also developed an eInvoice format that is in use by eInvoice service providers. Finnish Post was the third and final producer of an eInvoice format. However, the format is not as widely used as other formats.  To-date, the Bankers’ Association format is the most successful one because the association is not dependent on making a profit from the format.

How does Finland plan to achieve 100% domestic eInvoicing?

The State Treasury of Finland plans to implement automated eInvoice handling by utilising AI and robotics. AI could analyse data within seconds to find an agreement number and amount and place the eInvoice on its payment flow to facilitate further automation. Currently, Finland has identified the most significant challenge to be that IT companies and other operators need to be aware of what data needs to be in the correct place to achieve ultimate automation goals.

How to capture the remaining ten per cent of the market that is not yet using eInvoicing?
Considering that there are many solutions to send eInvoices in place for SME, one option is to return the paper invoice to the sender and request eInvoices instead.

Greatest eInvoice Benefits for Finland

Besides the financial benefits, eInvoicing has a substantial environmental impact. Finland’s payment system is fully digitalised, transitioning from paper to electronic formats over several years. Today, nearly all consumers use online banking instead of visiting the bank office, considerably reducing the carbon footprint from transportation. Furthermore, only one per cent of Finnish consumers withdraw cash from the bank office. Most consumers have adopted cards and mobile payments, which further reduced the paper trail in Finland. In addition, corporate payments flow is ninety-nine per cent digital. New payment products such as eInvoice and electronic receipt have measurable climate benefits that can and are reviewed by the Finnish government annually.

Source: Federation of Finnish Financial Services

The CO2 impact and eInvoice progress in Finland is captured in below table. The carbon footprint of an electronic invoice is estimated to be 150g CO2e in comparison to 450g CO2e of a paper invoice. Approximately forty per cent of the CO2 emissions of a paper invoice is generated from paper, paper envelopes, printing and delivery costs. eInvoice has, as the name indicated, automated this process and reduced CO2 emission accordingly.

The State Treasury numbers indicate the proportion, in percentage, of sent and received invoices from companies and other organisations in the financial sector annually. The automation states how far the automated eInvoice process, due to the incorporation of artificial intelligence, is in the State Treasury.

Source: Finnish State Treasury

What’s next for Finland?

Finland has ambitious plans to progress towards automated electronic invoice processing in the coming years. Meaning that invoices will be handled automatically through artificial intelligence, further eliminating administrative burdens and lead to substantial costs savings for the public administration.

PO Invoice = Purchase Order Invoice, CM Invoice = Contract Matching Invoice
Source: Finnish State Treasury

To conclude, Finland has successfully implemented eInvoicing and is progressing towards fully automated eInvoicing processing in 2019. To achieve this milestone, have a look at our CEF eInvoice services and how you can get started today.

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