eInvoicing in the public and private sector

Since its inception as an EU commission-funded project in 2008, Peppol has evolved to become the EU standard for eInvoicing and electronic exchange of business documents in general. What’s more, the efficiency and interoperability that the network delivers has fuelled its expansion into Canada, Malaysia and Japan. For Singapore, Australia, and New Zealand, Peppol has become the centerpiece of the countries’ eInvoicing initiatives. 

Transacting other message types, such as product catalogs and orders is just as easy, and the document library supports the necessary documents for B2B/B2G process automation. For the moment, however, eInvoicing remains the most popular message form on the network.

While the public sector is the driving force behind Peppol uptake, there is expansion throughout the private sector as well. Whether it’s for B2G e-procurement or B2B e-document transactions, Peppol allows private companies with smaller revenue to access the global market on a more even footing, and rids larger private companies and multinationals from having to develop and maintain disparate electronic document networks. Peppol is a connect once, reach all network, which drives simpler connections, quicker payments, better data quality, and cost-savings. We will examine all this in greater depth throughout this blog post.

Public procurement makes up a huge and important part of the global economy. To paraphrase the European Union website addressing the current status of public procurement:

Acknowledging this, the European Commission identifies areas that are integral to efficient public procurement, which includes:

Apart from being the home of Peppol, Europe is the perfect ecosystem to demonstrate why Peppol is so effective, as you have many countries within close proximity that have a desire to trade, but have been hindered by the different standards, business requirements, and laws of their respective countries. According to the OpenPeppol website, this range of different requirements leads to suppliers having to use different integrations and send eInvoices in multiple formats. This results in business siloes, where a supplier from one country can more easily trade in some regions than in others.

So what are the consequences of these difficulties faced by suppliers? 

When examining the benefits of the Peppol eDelivery network, by having a single point of connection, businesses can expand their reach on a more level playing field, without incurring extra costs or roaming fees. This is undoubtedly better for suppliers, but it’s also better for public contracting authorities, who benefit from simpler trade, and now have access to an even greater pool of suppliers. Remember, even very modest efficiencies can save billions.

In this context, it makes a lot of sense that Singapore, Australia, and New Zealand have embraced the Peppol network. All three are countries with small populations that are comparatively isolated. As an imperative, they need to be making cross-border business document transactions as seamlessly as possible. This is exactly what Peppol does, removing some of the barriers to international trade by not just improving access to global markets as mentioned before, but allowing partners to efficiently comply with the tax laws of the country they are transacting with.

Europe since year been aiming for a technological transformation leap to broaden eProcurement. This is how the, Directive 2014/55/EU was born and, it officially came to force on April 16, 2019. This directive states that all European public administrations must be able to accept eInvoices from their suppliers.

With the definition of the open standards, companies can negotiate electronically with any European public sector or purchase party and start procurement processes.

The Commission announces the launch of a call for evidence to evaluate the eInvoicing directive.

Consulting stakeholders and the wider public to get hands-on feedback  regarding;

To better understand the added value of synergies with other EU initiatives (e.g., VAT in the Digital AgeEN•••, EU standardisation strategy and the specifications of the eDelivery Building Block), the need for a revision of the directive, and the efficiency of eInvoicing in terms of costs and benefits for users, especially small and medium-sized enterprises.

Read it in its entirety here

While Peppol began with public procurement in mind, private companies conducting B2B transactions benefit in exactly the same way, both when transacting domestically and internationally. In advanced eInvoicing countries such as Norway, it is not just a requirement for public contracting entities to be able to accept and process eInvoices, but public entities’ suppliers are required to send them; there is no option of sending a paper or PDF invoice. While there is no such law in Australia or Singapore, inducements including grants and a guaranteed 5-day payment window to suppliers have been offered in order to encourage faster adoption of Peppol for the eInvoicing process.

While the public sector and big businesses transacting across borders can benefit from eInvoice for export, SMEs often find it harder to make technological changes. Here are just a few of the reasons:

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Public bodies are recognizing this difficulty, which is why the European Commission is turning their attention to them, making recommendations into how SMEs can be better served when making the switch, and better articulating what benefits SMEs’ adoption of digital systems can bring. These benefits include a broader customer base and greater competitiveness when bidding for public procurement contracts.

It is in everyone’s interest for SMEs to become eInvoicing compliant, as SME participation in public procurement can also make a significant contribution to economic recovery.

The Australian 5-day payment guarantee was done with SMEs in mind; by quickly paying suppliers for orders up to AU$1 million — businesses with smaller financial reserves would have a greater cash flow to run and expand their operations.

Electronic invoicing (eInvoicing) involves the exchanging of invoices electronically to required formats and specifications. eInvoices are digital throughout their entire lifecycle, so just because an invoice is stored or sent using a computer, that doesn’t necessarily make it an eInvoice. PDF invoices sent through email are not electronic invoices.

For both the public and private sectors, eInvoicing provides strong benefits from the outset, which are:

eInvoicing cuts down on the cost of printing and materials, but the main savings are found in the fact that no manual handling needs to take place, meaning fewer approvals are needed and manual errors are drastically reduced.

Comparing paper- or PDF-based invoices to eInvoices, fan approximate saving of €15 for each invoice processed!

Peppol’s structured data file means that nothing needs to be manually entered into a business’s accounting system, or no employee needs to spend their time chasing missing or incomplete data. Payments can be reconciled quicker, leading to improved cash flow, which is especially important for SMEs.

Emails can be easily hacked and invoice details changed to perpetrate scams. Peppol’s registration process, including business number authentication and listing on the global Peppol directory, along with the network’s architecture, make it a much more secure choice for exchanging important information.

2023 UK Finance report Over £1.2 billion was stolen through fraud in 2022, a reduction of eight per cent on 2021. The number of fraud cases across the UK was down four per cent to almost three million cases.

Peppol only requires one integration to be able to trade with any other partner. The adoption of different electronic procurement systems or the reliance on a host of service providers is no longer required. This means greater market access for businesses of all sizes, and a benefit to public sector procurers, who now have a wider selection of suppliers to choose from.

Peppol can be easily integrated with an ERP system without having to purchase any new software. This works by using a Peppol infrastructure provider’s API and connecting it to your existing software without having to worry about things like hosting or obtaining additional certifications.

In an increasingly ecologically conscious economy, eInvoicing means less printing and resource use. Physical storage space is also no longer required.

We’ve heard a lot about interoperability, but how exactly does Peppol achieve this? While we will only broadly outline the technical details in this blog post, you can read our Peppol Crash Course (PDF) for more in-depth information.

In short, Peppol offers interoperability on both the transport of messages between Access Points (described below) and at the business document level:

Access Points are the communication nodes in the Peppol network, built on the four-corner model, which unites different service providers. This means that no matter which Access Point you are operating with, you can exchange business documents with any other registered participant on the network around the world. 

Combining architecture, business operability specifications, and ease of access to others through the global Peppol directory, interoperability for B2G and B2B eInvoicing is more seamless than ever before!

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