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Use CasesPayment & Reconciliation

Payment & Reconciliation

Settling the trade closes the loop: the verifiable invoice created at the start is now matched to payment and reconciled. This is where domestic tax compliance is realised — and where the heavy machinery of network-based e-invoicing turns out to be unnecessary.

The story today

The buyer pays; the seller matches incoming payments to invoices, issues or receives a remittance advice, reconciles its books, and reports for tax.

The work is manual and the assurance is weak:

  • Reconciliation is manual — matching payments to invoices by hand, with mismatches and write-offs.
  • VAT is under-reported — sales can simply be omitted, because the tax authority relies on each party’s self-reported figures.
  • To gain visibility, some authorities mandate network e-invoicing where the tax office sits as a “5th corner” watching every message — heavy infrastructure, transaction fees, and a network both parties must join.

How it works with verifiable documents

The verifiable invoice from the buy-sell flow is matched to a verifiable payment or remittance credential. Because the invoice is authentic and machine-readable, reconciliation is automatic — and a tax authority that wants visibility is simply cc’d on the credential.

The verifiable invoice and a verifiable payment credential are matched automatically, producing reconciled books and VAT compliance, with the tax authority cc'd on the credential
  1. The seller’s invoice (from buy-sell) and the buyer’s payment/remittance arrive as verifiable credentials.
  2. The two are matched automatically — invoice to settlement — with no manual reconciliation.
  3. The books reconcile themselves, and VAT compliance follows from authentic, matched records.
  4. A tax authority that wants oversight is cc’d the verifiable credential — no network membership, no central hub.
  5. The same architecture serves domestic and cross-border settlement identically.

Why this approach wins

Compared with network e-invoicing and the tax-authority-as-5th-corner model:

  • More scalable — the tax authority is cc’d on a credential, not wired into a network, and one architecture covers both domestic and cross-border. Hub models need both parties on the same network and a separate cross-border build.
  • Higher integrity — invoice and payment are matched, authentic, and attributable, so omitting a sale is far harder than under a self-reported return.
  • Cheaper to implement — automated reconciliation rides the accounting systems businesses already run; there are no routing hubs and no per-transaction fees.

See the Implementation Model for why this beats the network approach.

What it’s worth

This flow realises:

  • Revenue integrity — domestic — matched invoice-and-settlement records lift VAT compliance at the point the sale is proven paid.
  • Operational efficiency — automated reconciliation in place of manual matching.
  • Compliance & auditability — every settled trade is attributable and verifiable.

The value is quantified in the business cases — most directly for the Tax authority and the Trader.

Documents & learn more

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