National e-invoicing vs. Peppol e-invoicing

The benefits of e-invoicing are only just being realized, resulting in recent strong uptake throughout the world. While this is a step in the right direction, there are often two main issues that arise, depending on what stage of development a country is at. The problem can be either:

VAN operators and service providers currently profit from setting up individual closed networks, allowing businesses to exchange electronic documents based on different standards, but this is not particularly cost-effective for SMEs who often exchange relatively few documents. For a larger business with trading partners in different countries and their own ERP system, they either need to have an in-house team that constantly develops and maintains new integrations, or pay the aforementioned service providers to take on the task of facilitating smooth e-invoicing transactions. 

This is something the Peppol network is aiming to simplify. Growing out of a pan-European e-procurement initiative, Peppol operates on a connect once, reach all model, with shared document and infrastructure specifications making the global transfer of e-documentation interoperable. An open network, Peppol is being used with great success for B2G and B2B invoicing, moving beyond Europe and into Singapore, Australia, New Zealand, the US, Mexico, South Africa, and more!

As we can see in the graphic above, Europe, North and South America, and ASEAN countries are really pushing ahead with e-invoicing, in most cases led by the government agencies who want to:

A notable exception here is North America. While many private companies are utilizing e-invoicing as part of their business operations, there are no indications that the public sector intends to become a catalyst for expansion or standardization in this area.

As we can see, the implementation and use of e invoicing is being embraced by the public and private sector alike, but its application is inconsistent. In the globalized market that most businesses and governments operate in, there is much room for improvement — which leads us to a discussion about national e-invoicing standards.

Scandinavian countries such as Sweden, Norway and Denmark have long worked with e-invoicing, establishing national standards in the early 2000s. In Norway’s case, mandating that all public sector organizations have the capacity to process e-invoices all the way back in 2012. Due to the need to tackle tax evasion mentioned above, South American countries such Colombia and Chile have also mandated national e-invoicing standards. In Brasil’s case, there are different e-invoicing regulations within the country. For Saudi Arabia, the country began to enforce e-invoicing in December 2020, with some issuing requirements but without a nationwide standard. 

As the name suggests, national standards are great for domestic use. For countries that are developing e-invoicing capabilities, it is a great start. However, it quickly becomes apparent that even for countries that have a coordinated national e-invoicing initiative and set of requirements, there are limitations. Interoperability between different countries’ systems is not guaranteed, necessitating the development and maintenance of individual integrations for businesses and government bodies that wish to transact across borders. This is done either by the businesses and government bodies themselves or with the help of Value-Added Networks (VANs) and service providers.  

The VANs and service providers often provide interoperable and secure document transfer through two-corner and/or three-corner models. 

As we can see from the diagrams in the infographic above:

Within Europe, and especially the European Union, the fluid movement of people and goods has meant that interoperable e-invoicing is extremely important. The two-corner and three-corner models are not fit for such a dynamic trading environment, with suppliers transacting with a variety of public sector organizations and private companies throughout Europe and beyond.

This is where Peppol comes in, as a set of technical specifications that can be integrated into accounting systems and software to allow for B2G and B2B exchanges of electronic documents. Peppol is central to e-invoicing initiatives, but it can be used for many different e-business documents, such as e-Orders, e-Advance Shipping Notes, eCatalogues, and Message Level Responses.

Peppol is now the European Standard for e-invoicing. As the EU commission says:

Public procurement accounts for roughly 18% of the EU’s GDP. To make it effective, the communication flow needs to be quick and cheap; to make it competitive, in the spirit of the Digital Single Market, all companies with the requisites across the Union should be able to tender for a contract.

Peppol provides a more level playing field for suppliers across the EU to win contracts and transact with public sector organizations.

The key to Peppol’s ease-of-use is its four-corner model, which unites different service providers within the network.

As shown, the four-corner model allows Access Points to connect for the secure exchange of documentation through the global Peppol directory. In this open network, it doesn’t matter which Access Point a buyer or supplier uses, they can directly connect to any other transacting partner on Peppol through their respective Access Point.

With document-level specifications, the Peppol standard ensures interoperability at the message level, allowing for the automatic processing of data in the receiver’s accounting system that conforms to the required terminology and entry fields. For this reason, the national e-invoicing formats developed by early e-invoicing adopters such as Sweden (Svefaktura), Denmark (OIOUBL), and Norway (EHF) are either increasingly merging with, or being replaced by Peppol specifications. Throughout Europe, Peppol is the preferred national document format.

Read about Peppol’s components and how it works in more depth on our page: What is Peppol and How Can Your Organization Benefit?

As of April 2020, all EU member states are required to ensure that their public sector organizations are able to receive and process e-invoices according to European Standard EN16931. As the Peppol invoice is compliant with this standard, the use of the network has only increased.

As already discussed, despite being the most advanced in the region, it is not just Peppol EU; any country in the world can take advantage of the network. In the last couple of years, Peppol has become central to Australia, New Zealand, and Singapore’s e-invoicing strategies, with the establishment of Peppol Authorities in the three countries. As a government-supported measure, they hope to encourage the public and private sectors to benefit from:

What do you need to do to get started with the Peppol network?

As you can see, except for those small businesses operating through their ERP system, connecting to Peppol requires Access Point accreditation, a lengthy process to prove technical and operational competence that often presents difficulties. 

Read about Access Point accreditation in our blog: Peppol Access Points – Setting Up Your Own Versus Working with a Provider

The preferred method is to partner with a Peppol Access Point provider. By working with an Access Point provider, you can take advantage of their shared-instance or white-label options, using their Access Point as if it were your own. By doing this, you avoid the accreditation process almost completely.

As we’ve seen, Peppol is widely adopted to support e-Invoicing demands. Tickstar, is the market leader, operating 20% of all active access points in the entire Peppol network. In some countries, like Australia, 85% of all businesses registered on the Peppol network use Tickstar. We have been dealing exclusively with Peppol since 2012 and are happy to assist your business with our user-friendly and scalable infrastructure. Depending on your business, by partnering with us you can benefit from all or most of the following:

To connect to Peppol or learn more about how the network can serve your business, book a call with one of our specialists.