TLDR: Curious about Peppol? Peppol is a leading global e-invoicing network that simplifies cross-border transactions, boosts efficiency, and ensures EU compliance. Read on and discover how Peppol is transforming digital procurement and what it means for your business.
What is Peppol?
Peppol is the world’s most popular and reliable network for e-invoicing. Peppol simplifies the exchange of e-invoices, purchase orders and other electronic documents from one system to another, thereby streamlining both domestic and international e-procurement processes. This is achieved through Peppol being an open e-delivery network that provides a common infrastructure and standards for cross-border commerce.
Peppol was established in 2008 by the European Commission, as a means of simplifying electronic procurement processes across European countries. Within this remit, the Peppol network was created to enhance efficiency, reduce costs and improve interoperability in public procurement.
Today, Peppol is approved the majority of European Union (EU) e-invoicing mandates affecting governments and businesses across the continent. This means Peppol is integral to security and compliance in electronic invoicing, and to digital transformation in finance.
The name “Peppol” was originally derived from “Pan-European Public Procurement Online However, its capability, purpose and reach has since expanded way beyond that initial description. After gaining traction in European countries, Peppol became widely adopted around the world, and is now a global standard for both B2B and B2G electronic procurement. Peppol continues to evolve, with ongoing efforts to improve its standards and expand its reach.
How Peppol works
Peppol works by standardising how information is structured and exchanged, so consistency and compatibility is achieved across all participating entities.
Peppol operates on a decentralised interconnected network using a four-corner model, which participants connect into via certified Peppol access points. Each participant is identified through their Peppol ID, which is held by Peppol Service Metadata Publishers (SMPs).
Peppol BIS (Business Interoperability Specifications) enable organisations to exchange information electronically while ensuring compliance with legal and business processing requirements around the world.
Why Peppol is so popular
Peppol brings standardisation to the e-procurement process, while making cross-border transactions faster, simpler and more secure. Its wide reach, delivering all these benefits, provides a commonly compatible system for B2G (business to government) and B2B transactions all over the world.
As well as invoices, Peppol allows businesses to exchange a wide variety of international trade documentation such as purchase orders, order confirmations, catalogues and shipping documents. Peppol facilitates invoice processing automation and helps optimise supply chain finance management.
In the EU, Peppol enables VAT compliance and satisfies mandates around public sector procurement, government e-invoicing and B2B invoicing. Beyond Europe, Peppol facilitates tax compliance in many countries around the world, including jurisdictions such as Malaysia, where CTC will soon become mandatory.
When it comes to Peppol vs EDI (Electronic Document Interchange), which can also be used for e-invoicing and other forms of secure document exchange, Peppol has a big advantage due to its standardised, open nature. In addition to data standardisation and the network model, differences between Peppol and traditional EDI include Peppol’s standardisation of security and the lower financial burden to get on board and manage. While EDI requires custom set-up and point-to-point integrations that demand resources beyond the reach of many small and medium-sized enterprises, Peppol is much more widely affordable. At the same time, Peppol’s secure framework protects every participant through a common set of demanding technical standards, service specifications and regulations.
All this makes Peppol an extremely versatile, practical and accessible tool for improving administrative efficiency and security, while enabling compliance with European e-invoicing regulations and legislation on the other side of the globe, including Asian countries such as Malaysia and Singapore.
Peppol e-invoicing benefits
Beyond EU compliance and improving transaction security, Peppol’s global e-invoicing standards deliver many business benefits, from cost-savings to enhanced supplier collaboration.
Using Peppol results in less paperwork and a lower administrative burden by streamlining procurement processes and reducing errors in invoicing. This also leads to faster payment processing.
Consistent data formats and protocols enable enhanced interoperability, while real-time tracking of transactions means demands for increasing transparency in public procurement can be met.
Discover more: How Furoo is leveraging e-invoicing to enhance value in SME accounting solutions
Preparing for Peppol to satisfy e-invoice mandates in the EU
Across the European Union, countries are preparing to introduce mandatory e-invoicing for B2B transactions. However, even as implementation dates approach, there is still a lack of clarity with regard to common requirements for format, content and data elements. This poses a challenge for software companies, who need time to develop offerings so they’re ready to go when needed.
A good approach to tackling these unknowns is to look at what all the various governments across the EU are currently asking for, in terms of both mandatory and optional fields, and set up e-invoice formatting to allow for all of them. After all, it’s easier to remove or ignore data elements than it is to add them retrospectively. Having every eventuality covered in advance is the best way to future-proof e-invoicing software for whatever national or common standards eventually emerge.
Alongside this, software companies need to make sure their chosen connection method into Peppol can handle all of these data elements, as 100% compatibility will be essential for regulatory compliance in procurement.
Starting to enable Peppol through an API integration (or in-house dev), and familiarising users with it now, is a good strategy for ensuring customers are fully prepared for EU digital procurement initiatives from the day they come into force.