E-invoicing: e-SEPA or SEPA?

E-invoicing is often linked to SEPA, the Single Euro Payment Area. SEPA should become the area in the European Union where citizens, companies and other economic actors will be able to make and receive payments in euro. This should happen under the same basic conditions, rights and obligations, regardless their location and regardless whether it is a cross border transaction.

The aim of SEPA is to advance European integration with a competitive and innovative euro area retail payments market that can bring with it higher service levels, more efficient products and cheaper alternatives for making payments.
 
SEPA and e-invoicing are expected to contribute significantly to the Lisbon Agenda, an effort to make Europe the most competitive and dynamic knowledge-based economy in the world by the end of 2010 (based on the assumption that we would not experience the current recession).

The assumed impact of e-invoicing on SEPA
It is commonly agreed that e-invoicing does not only significantly contribute to the Lisbon Agenda, but also to the uptake of SEPA as such! For instance, the final report of the informal task force on European E-invoicing stated that:

”Key stakeholders are eager to use this framework as a basis for service their offerings within the 2008 time frame, particularly to assist in the commercial leverage of the Single Euro Payments Area (SEPA)”

Moreover, the European Expert Group on E-invoicing declared in its mid term report:
 

”Electronic invoicing could also support the migration to SEPA (Single Euro Payments Area) based on further payments automation.”

The European Commission stated in its proposal for a new VAT directive:

”Also, the Single European Payment Area, which was launched in the beginning of 2008 in order to harmonise electronic payment processes across Europe, and the aim of promoting e-invoicing can be of mutual benefit to each other given the inherent links between invoices and payments.”

Interestingly enough, e-invoicing is not a part of SEPA. It was decided that SEPA should ultimately consist of:

-          the single currency: the Euro
-          a single set of Euro payment instruments
–          credit transfer, direct debit and card payments
-          efficient processing infrastructures for euro payments
-          common technical standards
-          common business practices
-          a harmonised legal basis, and
-          ongoing development of new customer-oriented services.

Invoicing as value added service
So how should we position e-invoicing against SEPA? The image underneath could shed some light.

(made available by courtesy of AcceptEmail)

High potentials within e-SEPA
This clearly shows that e-invoicing is not part of the core instruments of SEPA. The core instruments are transfer, direct debit and card payments. E-invoicing is positioned as a value added service on top of these core instruments, similar to e-payments and e-mandates.

For that matter we should consider e-invoicing, e-payments and e-mandates as a part of what could be called e-SEPA: The Single Euro Payment Area that deals with electronic instruments. In particular e-mandates could have a profound effect on SEPA; maybe even more than e-invoicing. This is because not every e-invoice will be directly linked to payments within SEPA (A lot of invoices are more closely linked to a supply chain than to payments). Whereas each e-mandate is directly to use of –SEPA- payment instruments.

So maybe we should start to consider e-mandates to have the highest potential in enabling SEPA and start to create a tighter link between those two than that between e-invoicing and SEPA, since e-invoicing has more to do with e-SEPA, not SEPA.