The document summarizes a new ISO standard for creditor references that allows automatic reconciliation of payments to invoices. The standard features a unique identifier, check digit, and reference length to uniquely identify invoices globally. It is expected to reduce costs and mistakes while increasing straight-through processing as it facilitates automatic reconciliation between payment and invoice systems. The standard provides benefits but adoption may be gradual as it coexists with existing national standards.

1. Going Global: The New ISO Creditor Reference
Olli Kahkonen, Nordea - Juha Keski-Nisula, XMLdation.com
(Published in GTnews 03 Nov 2009)
ISO approved a new standard that allows creditors to automatically reconcile incoming payments with
outstanding invoices. The ISO Creditor Reference standard provides a means of automatic reconciliation
that is fit for global use.
Because of the significant differences existing among national creditor reference standards, ISO has
developed a new global standard featuring the best functionalities in use today. The ISO Structured
Creditor Reference to Remittance Information (ISO Creditor Reference standard) deploys three distinct
features:
1. Identifier.
2. Check digit algorithm.
3. Length of the reference.
Figure 1: Illustration of the ISO Creditor Reference
Source: XMLdation.com
The number of creditor references (RF) is unlimited – there are 36^21 different unique RF per invoicing
system. But with six reference numbers you can identify 217 million invoices uniquely - the shorter is
better. We recommend using numbers with nine numbers, where the creditor can identify the 999.999.999
invoice reference.
The Benefits of the RF
The use of RFs is common in many countries at some level. The RFs allow for automatic reconciliation of
receivables against outstanding invoices. Without such standards, reconciliation would be done in a much
less efficient way, for example manually, based on information such as client name, address, amount paid
and invoice number.
Banks operating in countries where no RF standard is in place today might consider deploying the new ISO
standard.
1

2. Fewer mistakes, lower costs, higher automation
Creditors and banks involved in the processing of a bill payment are able to verify that the RF indicated by
the debtor (payer) is correct with the payment instruction, based on a unique check digit included in the RF.
On the payer side, with either an accounts receivable (A/R) system or through online banking, this
verification will be done at the same time that the debtor enters the payment details.
High automation level brings true straight-through processing (STP)
RFs can be imported into the A/R system, where reconciliation will be done automatically, as shown in
Figure 2.
Figure 2: Example of Automatic Reconciliation
(Source: XMLdation.com
Increasing collaboration
Last, but not least, RF standards are the basis for close cooperation between businesses and enterprise
resource planning (ERP) vendors, integrators and other service providers with regard to the development of
efficient IT applications in the area of payment processing.
Close co-operation of all concerned parties in the implementation process will contribute to making the ISO
Creditor Reference available to billers and payers seeking to explore the global market place.
Initial feedback from corporate clients indicates that the new ISO Creditor Reference will be adopted in a
first step towards cross-border invoicing, as there are no overlapping procedures with existing domestic
references in this area.
2

3. Market Adoption of the ISO Creditor Reference
The availability of a global ISO Creditor Reference standard does not immediately replace existing national
or local creditor references. The adoption of the ISO Creditor Reference will be determined by market
demand, e.g. whether originators of large volumes of invoices (billers) and their customers (payers) decide
to use the global ISO standard. A successful rollout will also depend on the engagement of IT providers,
such as ERP vendors, for example.
Banks currently offering creditor reference should therefore prepare for a period of parallel use of existing
national RF standards and the new global ISO standard.
To further facilitate consistent implementation of this new standard, ISO considers publishing a Message
Implementation Guide (MIG). Last but not least, parties engaged in the implementation of the global
Creditor Reference are encouraged to share any lessons learned, as well as country implementation
guidelines with ISO.
Summary
Implementing the RF will reduce costs and mistakes, increase STP and develop cash management
techniques. All that is now needed to reconcile a payment is the RF.
3