When we talk about international electronic invoicing and e-procurement processes, this means dealing with the world of Peppol, which in many cases has helped pave the way towards the digitization of these processes, offering standards, technologies, and best practices.
With more and more countries starting to implement electronic invoicing, taking advantage of the very solutions offered by Peppol in some cases, it’s crucial to understand how this tool works, how widespread it is, and the steps a company who is willing or needs to exchange documents through Peppol channels must take.
What is Peppol and how does it work?
Pan-European Public Procurement Online (Peppol) was born in 2008 as an innovative project funded by the European Union and aimed at identifying a set of infrastructures and technical specifications that enable and facilitate cross-border e-procurement processes. From the outset, the primary objective of Peppol was to offer interoperable technological solutions that enable the transparent exchange of documents and information between companies and public administrations established in the various EU territories.
At the outset, we anticipate that although Peppol was born in a European context, it immediately attracted the interest of businesses, entities, and organizations around the world. For years now, Peppol standards and infrastructure have been present in non-European countries, where they have often been chosen by governments to encourage the adoption of electronic invoicing. This is the case in Singapore, Australia, and New Zealand. But let’s go in order.
Standards and technology
The Peppol network consists of a series of components that interact with each other, enabling the exchange of documents and information between enterprises and public administrations:
- Access Points (APs): these access points, certified by OpenPeppol, are the direct point of contact for businesses and entities. The use of agreed communication protocols and standards, such as the UBL XML standard, enable the formation and exchange of IT documents. Exchanges, therefore, take place exclusively between accredited APs.
- Service Metadata Publisher (SMP): is a true decentralized registry that provides information about Access Points and the types of messages a Peppol recipient can receive. For example, a recipient might be able to receive invoices according to the Peppol standard, but not electronic orders or transport documents. SMPs contain the available addresses and metadata of users connected to the Peppol network.
- Service Metadata Locator (SML): is the only central component of the network and is a registry that collects and identifies all SMPs. Each interlocutor has a unique identifier in the form of a URL through which Access Points locate the SMP and the access point to the recipient of the transaction.
All documents provided by Peppol transactions are based on a UBL XML layout, which is interoperable and also suitable for long-term digital preservation. We will talk more about which document types can be exchanged through the Peppol network later. The path and interoperability characteristics for each document type are defined by the Peppol Business Interoperability Specifications, known simply as Peppol BIS.
In many countries there is a Peppol Authority, which is responsible for accrediting Access Points and SMPs and also acts as a connection with the entire Peppol network and the OpenPeppol association. In Italy, the Authority in charge is AgID (Agenzia per l’Italia Digitale).
Goals of Peppol and the OpenPeppol Association
Now that we know what Peppol is, let’s try to understand how it is structured and the goals it wants to achieve.
As of 2012, the OpenPeppol association is in charge of the project. They take care of updating the infrastructure, standards, and agreements that govern the relationships between the various actors involved. In addition, in countries where there is no Peppol Authority, this role is played by the association itself. This means that service providers who want to be accredited as Access Points or SMPs, but who are based in countries where there is no Authority, can refer directly to the association.
OpenPeppol, then, is responsible for managing and maintaining the network, always keeping in mind the goals that the Peppol project intends to pursue:
- Realize interoperability in e-procurement and e-procurement procedures while promoting transparency;
- Automating business processes and transactions, both in exchanges with public sector entities and in the private sector;
- Supporting businesses of all types, including SMEs, and helping them become more globally competitive;
- Realize a digital single market, one of the main goals of the EU agenda.
The spread of Peppol around the world
As we mentioned above, Peppol is now extremely widespread, even outside Europe.
To date, Peppol has 41 member states in the world, with a varying number of service providers. Within this list, we also find several non-European entities, including, for example, Australia, New Zealand, Singapore, Japan, Mexico, China, Turkey, the United States, the United Kingdom, Liechtenstein, Armenia, and Switzerland.
Joining the Peppol network is (or has already been) an opportunity to boost the adoption and diffusion of electronic exchanges, from electronic invoicing to all e-procurement processes in general, by offering businesses and public administrations tried and true tools and structures.
Especially for the non-European countries we listed above, the Peppol network also represents an element that can facilitate cross border transactions with the European Union. In fact, the worldwide spread of Peppol could be a key driver for the creation of a single global market, far beyond the initial goals of the European Union.
Digitizing procurement processes through Peppol
To date, Peppol makes it possible to exchange various types of documents electronically in a totally secure and transparent manner, but it is mainly used to manage procurement procedures, electronic invoicing, and electronic ordering processes.
Currently, there is no obligation at the European level regarding the use of electronic invoicing, nor is there an obligation at the EU level to use Peppol.
However, the use of the network and the solutions it provides is becoming increasingly widespread. We would also like to remind you that the UBL 2.1 layout for the electronic invoice complies with the specifications defined by European standard EN16931, so it is perfectly in line with the established interoperability requirements.
In fact, many European countries have adopted UBL 2.1 or other Peppol tracks to implement electronic invoicing: Luxembourg, the Netherlands, Latvia, Norway, Poland, Portugal, and Belgium, to name a few.
Since the BIS specifications developed by Peppol cover a wide range of business documents, fully digitizing all procurement processes is not only possible but desirable. For government agencies and businesses alike, digitizing ordering and sales processes entails:
- Visibility and transparency on the entire process;
- Automation of steps and reduction of human error;
- Savings in management time and costs;
- Raising the level of digital skills and competitiveness of the enterprise.
To date, Peppol implementation levels are very heterogeneous because the most common approach is to “digitize one piece at a time”, to enable a gradual transition to the new management.
In Italy, for example, the Peppol track is used for the exchange of electronic orders, which, since 2020, are already mandatory for some sectors of the public administration and, eventually, for the entire public sector.
All the documents that you can manage with Peppol
So, what documents can be managed through Peppol?
With Peppol you can manage the following documents that define the entire order, sales, and payment cycle; for each of these, OpenPeppol takes care of producing and keeping the respective BIS specifications up to date:
- Electronic invoicing, which is already adopted in many European countries and beyond;
- Electronic ordering, of which we have an example in our own country, where electronic ordering has been introduced as mandatory for national health system entities and their suppliers;
- Transport documents, adopted by many companies for the digitized management of the entire procurement cycle.
Beware, however: the fact that these documents are available does not mean that all stakeholders in the network are able to manage them. In fact, each company (end user) decides which documents to implement Peppol management, depending on its own needs.
Therefore, before sending an electronic invoice, order, or DDT to a customer or supplier, we have to make sure that they are able to receive and process them.
This type of information is managed and made available, as we saw above, by SMPs (Service Metadata Publishers), which allow us to know which documents a Peppol recipient is able to receive.