Exchange Framework Profile: Equinor
The desire for more efficient business processes and technology advances are driving digitalization of the U.S. payments ecosystem. However, the U.S. business-to-business (B2B) payments industry still heavily relies on manual processes to send and receive payments and payment information. These manual processes are inefficient and costly.
Equinor, a global energy company with a presence in 26 countries, joined the Business Payments Coalition’s E-invoice Exchange Market Pilot to help accelerate U.S. B2B industry innovation. Equinor and other market pilot participants are developing and testing a virtual network, often referred to as an exchange framework, to enable businesses to share electronic invoices (e-invoices) with one another without changes to their systems.
An exchange framework is a set of standards, policies and guidelines that enables businesses to connect once, then exchange electronic documents with anyone, independent of the platform, system or application. To be successful, the framework requires four types of participants or “corners” – the supplier, two solution provider access points and the buyer. Once implemented, this framework will allow efficient, seamless exchange of information between businesses.
In this virtual four-corner framework, Equinor represents the buyer and will use the exchange framework to receive e-invoices from suppliers via the access points. The Federal Reserve recently sat down with Marcos Martinez, global AP operations manager and principal analyst at Equinor, to discuss how the exchange framework will help strengthen Equinor’s U.S. operations to compare with the high digitalization of other markets.
Q: Why is automating B2B payment processes important for the energy industry?
Marcos Martinez: Automating B2B payment processes isn’t just important for the energy industry. Automating these B2B payment processes will make it so we don’t have to manually validate data, and this will benefit all industries.
Energy has gained a lot of attention in the last several years and is a highly important sector. After the automation of B2B payment processes, we can direct our attention to solving real energy problems rather than worrying about back-office payment processing and questioning whether suppliers have received their money. The payment and invoicing processes should be automatic.
Q: Why should businesses embrace B2B payments digitalization now?
Martinez: For the last several decades, companies have largely focused on ensuring their individual in-house departments are communicating and working with each other. The industry is now ready for cross-company optimization. Now is the time for us to look outward and work with partners and suppliers to ensure our systems are communicating with each other. The exchange framework can and will bridge communication across multiple sectors and industries.
Q: How will the exchange framework compare with the high digitalization of other markets?
Martinez: In Norway, 99 percent of invoices go through a B2B exchange network, which means I don’t need initial data validation. In the U.S., every invoice we receive, whether as a PDF or via mail, requires manual review and transformation of this data for incorporation into our enterprise resource planning (ERP) system. This creates additional work.
Q: How will adoption of the exchange framework impact Equinor?
Martinez: Equinor is on board with this initiative and moving toward adoption because we’re looking for safe, secure and stable operations. This framework is building toward those standards. We believe these standards will have a long-term impact.
In mid-2023, when the exchange framework is established in the U.S., businesses will be able to support an operating model that may have the potential for global reach. This will allow us to shift our focus to meet demand. Reprioritizing in this manner without requiring us to learn new operating models and new ways of working will be a massive improvement and value add for Equinor.
“The technology we have today should allow us to reduce manual processes. Due to the current lack of digitalization, we have people validating data quality when they could be thinking about new ideas and innovative solutions.”
Marcos Martinez, global AP operations manager and principal analyst
Equinor
Learn More
In this profile series, hear from engaged businesses and service providers, such as Equinor, that are active in the E-invoice Exchange Market Pilot and committed to transforming B2B payments. This is the second profile in a series of ongoing features. You can read the first profile, featuring Microsoft, here.
Stay up to date on the latest B2B payments modernization news by joining the FedPayments Improvement Community (select “E-invoicing” and “Electronic Payments and Remittance” under the interest preferences) and connect with the Business Payments Coalition (Off-site).