Peppol as Part of Your Company’s Digital Transformation
May 14, 2021, 10:30 p.m CET
Post-pandemic, we can see the remote work trend continuing, especially for knowledge workers. While much has been made of the changes to the way we work over the last couple of years, businesses were already adopting digital systems and incorporating them into their workplaces. Especially for governments and international businesses, the benefits have been clear for a long time:
a) facilitate greater cooperation and efficiency when working across offices.
b) automate repetitive manual processes.
While digital transformation is seen as one of the pillars driving efficiency, better value for customers and greater profits/ savings for businesses themselves, it is no longer just a smart alternative, but rather a matter of survival for businesses working in an increasingly international and competitive market that has been hit by wage stagnation, mass job losses and revised consumer spending habits.
In this article we will take a quick look at what digital transformation looks like, what Peppol is, how its benefits can be a part of your company’s digital transformation, and how to connect to the network.
Peppol is being mandated in new countries and regions at an increasing pace. And being Peppol ready can make the difference between gaining more business and losing existing business.
Digital transformation as a business imperative
As mentioned above, digital transformation is a necessary part of any business’ strategy, whether that be expansion, greater profits or simply holding a segment of the market in turbulent conditions.
In a nutshell, digital transformation can be defined as digitizing the internal and/ or customer-facing processes that govern your business. This catch-all definition is about as granular as you can get when addressing public and private bodies of all shapes and sizes. Digital transformation looks different for everyone, depending on the customer and their needs, the employees, and of course, the sector that the organization operates in.
Here are just some of the considerations that can help guide the process:
- How can we increase our performance by digitizing parts of our processes
- What can we lose by not digitizing our processes – partly or completely
- What priorities do we need to make in terms of digitizing?
- How can we digitize in the most cost-effective way, without compromising quality?
- Will digitization better serve the needs of our clients?
- Is a need to introduce a new digital system supported by data?
- Is it technically feasible? / What resources and how much time is needed to support any proposed digital transformation?
- Will any transformation be at the expense of the comfort/ safety of employees?
Answering these questions can help you understand whether your business lends itself to digitalization and whether it is likely to be sustainable.
As Peppol experts, we will obviously be looking at this issue through the lens of businesses that frequently send and receive e-documents, such as public sector organizations and private companies that are involved in trade, manufacturing, software services and accounting, just to name a few.
For the organizations that are involved in procurement and the issuing/processing of invoices, we believe that Peppol satisfies the considerations above, and we will look at why that is in the next section. First, however, we need to explain what Peppol is and examine its general benefits.
What is Peppol
Peppol (historical meaning): (Pan-European Public Procurement On-Line)
Peppol started off as a project funded by the European Commission and 11 member states, in order to simplify e-procurement through a common standard across member states. Where public procurement counts for approximately 18% of the EU’s GDP, the need is obviously there for countries to transact more freely.
How Peppol creates a single digital market
OpenPeppol, the non-profit authority that governs the Peppol standards and specifications, highlights the following advantages that make Peppol practical and worthwhile for both public sector organizations and private companies.
- For suppliers to public sector organizations especially, PEPPOL allows the establishment of a single point of connection and a single contract with an electronic document transmission service provider. With the growth of the network, this benefit is increased, as the same connection can be used to interact with more businesses at low costs.
- The Peppol digital market lowers trade barriers for new or small suppliers through simplification of market access and the avoidance of roaming fees.
- A supplier’s choice of service provider is no longer dictated by the trading partner, abolishing duplication of services and fees. Both parties interacting on the Peppol edelivery network are able to choose whichever service provider they wish, without limiting their ability to trade with any other organization interacting on Peppol.
Peppol’s freedom comes from the four-corner model, which means a business, through an Access Point, has equal access to every participant in the Peppol network, regardless of the service provider used to connect.
To read more about Peppol Access Points and the four-corner model, see our blogpost, Peppol as Part of your SAP software.
Benefits of Peppol e-procurement
The Peppol standard’s benefits that were highlighted above were more theoretical in nature, mapped out at the start of the project. Many new projects can boast the same lofty ideals, but Peppol actually works, which is precisely why it is being adopted by governments around the world. Here we’ll provide some more tangible benefits that have been found by those who have been using the network successfully for years:
E-invoice processing costs slashed – Handling paper or PDF invoices incur significant costs for both the sender and receiver. The Australian Tax Office (ATO), a Peppol Authority, calculated that e-invoicing can cut costs by approximately 67%.
Fewer errors and faster payments – With Peppol, electronic business documents are guaranteed to reach the recipient, with automation and Peppol specifications making sure of good data quality and fewer manual errors. This means faster payments for the businesses that need it.
Easy ERP integration – For companies using SAP or other ERP solutions, they can easily connect their system to Peppol without having to purchase a new system. As well as simple API integration. Peppol services such as Tickstar also offer intuitive interfaces that make interacting with the Peppol directory and network as easy as possible. Lower risk of fraud – E-invoicing fraud costs organizations billions of dollars annually. Authentication processes and the security of the network itself lowers the risk of hacking and fraudulent transactions.
Environmentally friendly – E-invoicing eliminates paper, requires fewer energy resources, and makes no demands on physical storage space.
Peppol as part of your digital transformation
Going back to the five questions that should be considered when approaching digital transformation, we can now better see why Peppol passed the criteria with flying colors.
- How can my customers’/ clients’ be better served?
Customers and clients can be better served by sending and receiving e-invoices quicker, more reliably, and with greater security, leading to faster payment settlement.
- How can we become more efficient without compromising quality?
The connect to one, connect to all principle that governs Peppol means that domestic and cross-border B2B and B2G document transfer can be achieved with greater efficiency, without affecting the quality of documentation or security.
- Is a need to introduce a new digital system supported by data? The reduction of costs related to processing invoices is a key piece of data that explains why Peppol has expanded beyond Europe to other developed countries.
- Is it technically feasible?/ What resources are needed to support any proposed digital transformation?
Technically, connecting to Peppol can present difficulties for businesses, which is why many opt for Peppol service providers, who manage Peppol registration, certification, technical specifications, and hosting. With a Peppol service provider, connecting to the network is easy and requires few resources.
- Will any transformation be at the expense of the comfort/ safety of employees?
Employees’ work is made easier, through the automation of repetitive manual tasks and a reduced need to chase up supplementary information from clients or suppliers. These employees can now focus on work that is more varied and interesting.
We are not alone in the belief that Peppol is an integral part of digital transformation related to procurement. Information from the annual OpenPeppol General Assembly shows that:
- Over 130 million transactions between certified Access Points were conducted during the year 2019-2020.
- Certified Access Point providers almost tripled from 2018 to May 2021 (156 to 430).
- From 2018, Peppolhas gone from a pan-European initiative to a global network, with growth in the North American, Asian and Trans-Tasman regions, and the establishment of Peppol Authorities in Singapore, Japan, Australia and New Zealand.
Peppol in the EU
The birthplace of Peppol, there are now 14 Peppol Authorities in Europe that help set and manage local regulations. A Peppol Authority in a country is a sign that implementation is being encouraged, as seen with the Netherlands, Norway, Sweden and Belgium, who boast some of the highest numbers of registered Peppol participants, and widespread use throughout both the public and private sectors.
Peppol in Singapore
Singapore’s Info-communications Media Development Authority (IMDA) joined as a Peppol Authority in 2018, and has been working with businesses to help expand the Peppol network in Singapore. Up until mid-2020, the authority was even offering $200 registration grants for businesses signing up to the network. The strong push seems to be working, as an analysis of the Peppol directory from Singapore shows high numbers of registered participants. To support local requirements, Singapore is using an extension of Peppol 3.0 BIS billing.
Peppol in Australia and New Zealand
Australia’s Australian Tax Office (ATO), and New Zealand’s Ministry of Business Innovation and Employment (MBIE) jointly adopted Peppol in early 2019, in order to position themselves as digital leaders in the region and create a “seamless business environment”. According to figures from the Australian government, 89% of businesses still use manual or PDF e-invoices, of which 1.2 billion are exchanged annually. With stricter invoice requirements from New Zealand and Australian requirements that mandate e-invoicing for all federal agencies by 1st July 2022, Peppol use will undoubtedly increase.
Peppol in Japan
Similar to Australia, Japan has lower than expected levels of digital proficiency, with less than 20% of administrative work conducted online; however, the country is making strong efforts to change that. In 2020 the E-Invoice Promotion Association (EIPA) was founded, responsible for areas such as certifications, training, strategy, and in September 2021, the country’s Digital Agency became Japan’s official Peppol Authority.
In October 2023, the Qualified Invoice system is set to launch, with the EIPA promoting the uptake of Peppol compliant invoicing software.
How to register with Peppol
If your business is able to process Peppol formats then you may have the capabilities to get your own Access Point. However, accreditation with OpenPeppol is not an easy task, requiring fees, declarations, development, testing, certifications, and maintenance. We delve deeper into the accreditation process in this article.
The easiest way for big and small businesses is to sign up with an e-invoicing service provider, such as Tickstar. By implementing our service either as a white-labeled or shared instance, you can effectively implement Peppol in your business without any of the technical hassle associated with being part of the network. We handle onboarding, hosting, and support, so you can start transacting with private and public sector companies with the Peppol standard for invoice generation in a matter of days.
Contact Tickstar Team to see how Peppol can be an integral part of your company’s digital transformation.