e-invoicing – do we still need digital signatures?

e-invoicing – do we still need digital signatures?

Posted by Pete Loughlin in e-invoicing 14 Dec 2011

I read with great interest Christian Lanng’s response to Friso de Jong’s recent article on e-invoicing and digital signatures. I get the feeling that Christian doesn’t like OB10. Is it just me?

Purchasing Insight logoIt’s a good debate. Despite the removal of the requirement for digital signatures in some European countries Friso argues that this doesn’t necessarily mean that European organizations should stop using them. Indeed Friso thinks there is a set of positive reasons why they should be retained even though they are no longer a legal necessity. It’s a thought provoking piece and it’s provoked a response.

Christian Lanng doesn’t normally comment on such matters preferring instead to remain in the background, invisible – hang on – sorry, wrong Christian Lanng.

Christian Lanng responded in characteristic no nonsense opinionated style, arguing forcefully that digital signatures are an obstruction.

Christian is right – but Friso is more right – and this is why.

I’m in complete agreement with Christian that digital signatures are an unnecessarily heavy handed approach that has only delayed adopting of electronic invoicing in Europe especially in Germany where there was an insistence on ‘qualified’ digital signatures. It’s a sledge hammer to crack a nut and it should be a relief that this is no longer a requirement from 2012. However, Friso has made a really interesting point about the regime in Latin America. (Incidentally, there’s more about Latin America in Purchasing Insight later this week in the World Map of e-invoicing series)

The point Friso makes is that the authorities in some South American countries are going much further than simply approving the use of e-invoicing. They are mandating its use and the mandate comes with strict rules about security and the use of digital certificates. What’s the take up in Mexico and Brazil compared to Europe? Phenomenal.

The worse thing about the system in Germany was that it was difficult and optional. Give people something hard to do that is optional and no one will do it. Give them something difficult and make it a legal requirement, they’ll find a way of doing it. Take the ‘qualified’ out of the requirement and make it compulsory and you have a perfect blend of pragmatic security measures the with the ease of use that has allowed online banking to thrive.

For large, global organizations, Friso’s approach is sound advice. You need to incorporate digital signatures in some parts of the world so a single global approach needs this. What is good about the new legislation is that smaller businesses in Europe can now take part without all of the disadvantages that Christian outlines.

2012 is going to be an interesting year!

  • Christian Lanng (CEO Tradeshift) December 14, 2011 at 9:00 pm /

    Hi Pete,

    Two points to your excellent post

    1) First a lot of people misunderstand the use of digital signatures in Brazil and Mexico. most of the e-invoices are not really “e” they are just hashkeys from pieces of paper typed into a government database, this is like 80% of the transaction volume, there are very little business incentives or advantages to this, there is of course huge advantages for government, but it’s not e-invoicing. I believe that for a 100% model to work everyone needs to win. Don’t get me wrong I think that Brazil is doing a lot of stuff right and we spent quite a bit of time there also advising on government projects, so I know from first hand, but everybody should take a step back and understand the numbers before they use them as a case for digital signatures.

    2) Secondly no matter how anyone put it, the data don’t lie, REAL adoption of e-invoicing is markedly much much lower in all markets that mandate digital signatures (removing the false positives of Brazil and Mexico), and we see that for all our global campaigns with active users in more than 190 countries.

    Honestly I think half the arguments used in Friso’s blogpost is completely off-base, have you ever heard about any supplier that thought they were more respectable because they used a qualified digitial signature?

    I dont mind the use of digital signatures they have their uses, but dont think they ever will improve a process or advance adoption.

    /Christian

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