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The U.S. Federal Reserve and Business Payments Coalition (BPC) has announced plans to launch a pilot exchange framework for electronic invoices (e-invoices) and an initiative to improve electronic delivery of remittance information.
As part of a wider modernization effort, the Fed revealed that a group of 73 organizations will launch an operational pilot exchange framework that will enable businesses to exchange e-invoices.
Running through the end of 2022, the E-invoice Exchange Market Pilot will focus on the development, testing, implementation and interim oversight of the U.S. e-invoice exchange framework with an aim to establish an operational B2B invoice exchange framework by 2023.
In addition, last month, 42 organizations set up the Remittance Delivery Assessment Work Group to assess whether a similar exchange framework can facilitate the electronic delivery of remittance information across all payment types.
The group, which is expected to meet until mid-2022, includes the U.S. Treasury, several banks, and card giants Visa and Mastercard.
“The commitment to these work efforts by organizations across the industry is evidence that there is a real desire to modernize B2B payment processes,” the announcement said.
“This innovative work will catalyze B2B payments modernization and shape the future of the payments industry,” said Shonda Clay, who leads the Federal Reserve’s payments improvement strategy.
The initiatives are part of a broader collaborative effort initiated by the Fed in 2013 with a view to enhancing end-to-end payments. The 2015 Strategies for Improving the U.S. Payment System paper defined speed, security, efficiency, internationalism and industry collaboration as the five desired outcomes for an improved U.S. payment system.
The promotion and development of e-invoicing, together with improved exchange of electronic remittance information, could help significantly improve the quality and flow of payments for U.S. businesses. It is not just the savings made from the automation of invoicing (reduction in staffing hours, printing and postage costs etc), but combined with better remittance information it can help improve reconciliation of payments, which remains a significant pain point for many businesses. Better straight through processing (STP) will help reduce costs and improve overall operational efficiencies.
"Digital payments and processes benefit businesses through lower costs, better cash management, error reduction, risk mitigation, increased transparency and improved efficiency," the Fed concluded.
The adoption of ISO20022 standards across the banking industry could also play a significant role in supporting many of these initiatives. ISO 20022’s data-rich structure helps banks and their end-users provide STP by aligning and integrating the messaging standard with bank and corporate core systems. Additional data in each message can also support automated reconciliations, make banking systems more resilient and give banks better insights into the data.
