Universal Business Language: a key standard in accounting and business
Discover UBL, the international standard for accounting and business documents. Used by accounting, bookkeeping professionals for invoices.
Each industry uses a different business language, so one word can often have different meanings, or different words can have the same meaning, depending on the industry. A real Babel tower. Here is where UBL comes in handy: it provides a framework for trading partners to unambiguously exchange business documents across different industries. Without an awareness of the many UBL methodologies and their role, UBL can be perceived more complex or considered “too hard” to tackle successfully. Therefore, this article sheds light on the concept of UBL and what makes it widely used in businesses all around the globe.
What is UBL?
Universal Business Language (UBL) represents an international royalty-free library of standard electronic XML business documents (such as invoices and purchase orders). It provides a universally understood and recognized commercial syntax that allows business documents to comply with a standard business framework. UBL simplifies the use of e-commerce documents for businesses, helping them compete in the international e-commerce market. It also helps them conform with government regulations and specific industry specifications as UBL is an increasingly recognized standard, that is sometimes made compulsory, for example in public call for tenders. UBL can be incorporated with minimum disruptions in the existing business, audit and legal management practices, eliminating the need to re-key data from paper-based documents and providing an entry point into electronic business for small and medium-sized enterprises. UBL is owned by a a non for profit consortium called OASIS and is available for free to everyone, without any licensing fees.
UBL gathers XML business documents, but what is XML? Many computer systems contain data in incompatible formats, making it difficult and time-consuming to exchange between incompatible systems: web developers must convert large amounts of data, losing part of it in the process. To solve this issue, Extensible Markup Language (XML) defines a set of rules for encoding documents in a format that can be read and understood by both humans and machines. XML is designed to emphasize simplicity, generality, and usability across the Internet. XML stores data in plain text format, providing a software- and hardware-independent way of storing, transporting, and sharing data, making it easier to expand or upgrade without losing data.
When and how did UBL appear?
The UBL initiative started in mid-1999 to create a set of standard XML commercial documents within OASIS, the Organization for the Advancement of Structured Information Standards. The UBL working group was established as an OASIS Technical Committee in November 2001 and was aided by the participation from various industry data standards organizations. The goal of the OASIS UBL Technical Committee was to enhance and harmonize overlapping XML business libraries and similar technologies to advance consensus on an international standard. Rather than starting from scratch, the Committee proposed using a synthesis of existing XML business document libraries from CommerceOne and SAP as the basis for creating a new business document library. UBL 1.0 was released as an OASIS Standard on 8 November 2004 following three years of open development and public review.
Denmark has become the first nation to formally adopt the Universal Business Language. UBL is now used routinely by government agencies for electronic invoicing across Europe as well as in other non European countries. Increasingly, these implementations apply to tax clearance invoices as well. Users of UBL therefore include many (or in some countries, all) of the entities that do business in the public sector — a huge number of organizations.
In 2015, a major stepping stone ocurred : the official ISO/IEC 19845:2015 Universal Business Language Version 2.1 (UBL 2.1) was published, making UBL an official ISO (International Standards Organization) international standard. In other words, since 2015, the XML-based standard documentation is recognized internationally and has an even stronger normative power.
How does UBL work?
From concept …
The UBL conceptual model is based on modeling systems such as entity/relationship modeling and the unified modeling language (UML). UML libraries are based on conceptual models of information components, called business information entities. They are further assembled into document models that are transformed following the UBL naming and design rules. If this is a bit technical, don’t leave us now, we are explaining why UBL is becoming increasingly important.
Supporting 81 document types used mainly for procurement, e-Invoicing and transportation logistics, UBL can be embraced by any organization to satisfy an electronic format for important business documents. Numerous implementations prove that UBL was significantly adopted at a large scale in real-world public procurement programmes, initially in Europe and currently extending to other regions across the public and private sector. For example, since 2004, the use of the UBL Invoice standard has been mandated by law for all public-sector businesses in Denmark. Several million UBL invoices are currently exchanged in Denmark every month, with an estimated savings to the government of 100 million euros annually. Standards introduced for public procurement encourage adoption by other parts of the economy.
As the digitization of data continues to increase, the need to communicate this data electronically becomes fundamental, especially in a B2B context. In response to the need for a refined approach to business communication, UBL provides a functional and stable open global standard, proven to meet business requirements from its wide market adoption. Among the main benefits, the standardization of electronic documents through UBL has already reduced labor costs of countless companies worldwide. This increased adoption of UBL by businesses incentivizes other businesses as well to implement UBL as their standard means of communication. Given that UBL is open and free to everyone, the barriers to adoption are vastly lower than other standards, ensuring UBL’s continued growth. Additionally, UBL standardization is easy to learn, resulting in lower training costs of internal resources.
UBL also tackles the frequent lack of trust encountered in international trade in the digital environment, concerning the security, reliability, and authenticity of the processes and partners they are dealing with. Using standards creates certainty and enables trust.This is why certain regulations or call for tenders include the use of UBL as a compulsory requirement. Therefore, UBL contributes to establishing trust in international trade by providing the world with standards for the electronic versions of traditional business documents designed in a way that recognizes established commercial and legal practices. Exchanging standard UBL documents ensures that the structures and semantics of the information being exchanged are consistent and interoperable with trading partners.
UBL in accounting
The use of UBL in accounting and finance is increasing, for several reasons :
Digitalization of accounting
The push for digitalization in all sectors and business functions makes the need for a unified data framework even stronger. UBL provides this data framework that can be processed by various accounting or auditing software, or several company entities, in a single, fully interoperable way
Cross-border exchanges have never been so strong. About 70% of international trade today involves global value chains, as services, raw materials, parts, and components cross international borders, often several times.
As mentioned above, regulators make the use of UBL compulsory. For example, you may have already heard about PEPPOL, an EU platform that provides a set of technical specifications that can be implemented in existing eProcurement solutions and eBusiness exchange services to make them interoperable between disparate systems across Europe. . PEPPOL has developed the Business Interoperability Specifications (BIS) that use the Universal Business Language (UBL – ISO/IEC 19845. Since April 1st, 2016, the Belgian public sector recommends PEPPOL as the most convenient channel to receiving invoices.
Can UBL be customized?
In many small-businesses, the standard forms provided by UBL can satisfy business requirements well enough to be used without modification, so UBL can be implemented instantly.
If necessary, the implementation of UBL can be customized to apply additional business rules and information requirements to documents conforming to the standard UBL schema. Each UBL schema contains an optional extension area in which trading partners may agree to include any data not already covered by the predefined UBL data structure. This strategy allows nearly unlimited flexibility in individual trading relationships without requiring modification of the standard UBL schemas. Customizations of UBL can include extensions, restrictions, and other business rules applicable to documents.
How does FYN use UBL?
Fyn is the only invoice parsing solution that can convert unstructured and structured data from your uploaded invoices into internationally recognized standard UBL structured and searchable data output.