What is Peppol? A Comprehensive Guide

Globalisation is forcing businesses to evolve financial processes beyond paperwork and human intervention. The emergence of e-invoicing and other technologies has brought about fresh rules, laws, policies, and regulations to standardise these systems, facilitate seamless trade, and bolster cross-border payments.

This is where Peppol (formerly PEPPOL (Pan-European Public Procurement Online)) comes into play. This transformative network enhances and simplifies cross-border procurement and e-invoicing. As global markets continue to expand, Peppol plays a pivotal role in shaping a universal commercial landscape.

Here, we take a quick look at the Peppol network, how it benefits your business, and the ways it’s helping international organisations evolve.

What is Peppol?

Peppol is a global network designed to help companies and public institutions exchange standardised electronic documents (elektroniska dokument), such as invoices and purchase orders, securely and efficiently.

Originating in Europe, the solution is now widely adopted all over the world, providing an infrastructure for interoperability across countries, regions, markets, sectors, and systems.

Currently, 32 European countries are using Peppol. There are many other countries further afield, such as:

• Singapore
• New Zealand
• Canada
• Japan
• Companies in the USA

Other Asian countries, like Malaysia, are still waiting to jump on board.

How Does Peppol Work?

Peppol exchanges messages (like orders and invoices) over open protocols in an e-delivery system, using these rules of interoperability:

• Peppol uses the OASIS Universal Business Language (UBL) syntax defined by ISO/IEC 19845.
• Peppol offers a directory service to help identify recipients, the processes they support (stöd), and access point providers.

Communication is always through the Peppol eDelivery Network, a four-corner model. The sender and recipient are at opposite ends of the upper edge, while the corresponding access points are the respective bottoms.

Here’s how it works:

1. The sender forwards a document (like an electronic invoice) to a Peppol access point.
2. The Peppol network sends the document to the sender’s access point, where the counterpart can collect it.
3. If this counterpart wishes to send a document in response, it gets sent to its own access point.
4. The network then forwards the data to the recipient’s access point (accesspunkt).
5. The documents are pulled into the recipient’s (mottagarens) internal invoicing system, where they can be paid by EDI, wire, or some other method.

The Peppol network assigns specific addresses to the receiving access points. There is no static connection between access points. Rather, establishing a connection is part of the whole sending process.

Using the receiver’s Peppol ID, a request is made to the Service Metadata Locator (SML) for the Service Metadata Provider (SMP) address. The SMP responds with the exact formats supported by the receiver and the address of their access point.

If the files are in a format (formatet) supported by the recipient, they are sent to the receiving access point. This kind of setup makes it possible to reach any partner in the network (at any time), aligning with the Peppol motto: “Connect once, connect to all.”

The Role of Peppol in Global Markets

While initially developed for European countries, Peppol has become a key player (and the standard (standarden)) in global trade. It facilitates cross-border interoperability, helping international businesses reduce the barriers associated with regional regulations and incompatible systems.

As global companies face increasing demands for compliance, visibility, and efficiency, Peppol provides a universal framework that supports business processes like:

• Regulatory Compliance: Peppol helps businesses meet diverse laws in different jurisdictions.
• Global Trade (handle): It optimises exchanging critical business (företag) documents.
• Lower Costs: Replacing manual processes with automation reduces inefficiencies and lowers costs.

Governments and industries are increasingly mandating e-invoicing to combat fraud and streamline transparency. This spurs Peppol’s market relevance as global business continues to grow.

Who are the Peppol Authorities?

The Peppol Authorities work with theOpenPeppol AISBL Coordinating Authority and form the crucial links of the Peppol network. They also liaise with access point (AP) providers and Service Metadata Providers (SMP) in their region.

Their responsibilities include:

• Keeping contracts up-to-date (like the Peppol Authority Specific Requirements (PASR) for their area).
• Closing contracts with service providers.
• Ensuring that members meet contractual obligations.
• Support members with their queries.

Simply put, a Peppol authority advocates for the best interests of their country in the Peppol network.

A Brief History of Peppol

Formed in 2008, Peppol was started as a pilot project under the European Commission (and members of the PEPPOL Consortium) and was aimed at facilitating electronic public procurement. The first goal was to develop a harmonised digital infrastructure (infrastruktur) for public-sector procurement across EU member states.

To this end, all European governments developed technical standards implemented across borders to enable direct electronic communication between businesses and European government agencies (or customers (kunder)).

In 2012, the success of this initiative led to the establishment of OpenPEPPOL, a non-profit that governs the development and management of the PEPPOL network.

Key milestones include:

• 2014: Adoption of PEPPOL by multiple EU countries.
• 2019: Global expansion beyond Europe, such as Singapore, Australia, and New Zealand. The “PEPPOL” acronym is replaced by the brand name ʽPeppolʼ, which stands for “global e-procurement.”
• 2020s: Growing adoption in private sectors and increased integration with other digital systems.

The Mission of Peppol

The Peppol network aims to create a universal digital market that simplifies electronic transactions. By providing a standardised framework, the system:

• Fosters interoperability across different industries and solutions.
• Reduces administrative labour for businesses and public entities.
• Enhances efficiency in public and private procurement.
• Encourages the adoption of cross-border purchases (inköp), e-invoicing, and e-procurement standards.

Ultimately, Peppol eliminates the complexities of fragmented systems and creates a borderless trading ecosystem that benefits companies of every size.

Benefits of Using the Peppol Network

Using the PEPPOL network offers several key benefits for businesses, governments, and suppliers. Here are just a few:

Interoperability

Peppol enables global businesses to seamlessly communicate with trading partners, regardless of their technology or location. This makes global invoice management much easier.

Optimised Processes

The Peppol network promotes AP automation, eliminating paper documents and manual labour. This reduces errors and speeds up transactions.

Increased Cash Flow

The faster invoices and other procurement documents are addressed and settled, the more positive the cash flow. The system is fast because an open e-delivery network can reach all registered partners, not just those signed up to one or the other e-procurement platforms.

Cost Savings

Peppol reduces administrative costs, leads to faster processing times, and produces fewer errors. Businesses can save significantly by adopting the PEPPOL network (peppol-nätverket). Here are a few ways in which it leads to cost savings:

• It’s easier to onboard suppliers (leverantörer). You don’t have to worry about bilateral e-invoicing contracts or integrating two separate invoicing and payment software systems and processes.

• Peppol easily integrates with legacy procurement systems. This higher efficiency (like transferring documents without roaming charges) saves costs.
• Peppol doesn’t charge membership fees, often extracted from suppliers for access (tillgång) to an e-procurement platform.

Regulatory Compliance

The PEPPOL service helps organisations meet the growing demand for digital compliance and automated invoice processing, particularly in places where governments mandate its use.

Enhanced Security

Peppol ensures the secure exchange of sensitive data through certified access points, reducing the risks of fraud and data breaches. Their specifications for business documents ensure global interoperability. The system doesn’t require you to use a ton of e-invoice (e-faktura) formats or partner-specific transfer protocols.

Peppol Expansion

Another benefit of using the Peppol network is its continuously growing participant numbers and global reach. The system has recently worked to increase its international coverage even further by developing a global Peppol standard (the semantic data model ʽPeppol International Invoicing Model (PINT)) to connect the public sector (offentlig sektor) in Europe and Asia, as well as connecting tax authorities continuous transaction controls (CTCs) in a Peppol 5-corner model.

PINT is:

• Based on the established ʽPeppol BIS Billing 3.0ʼ and directive EN16931. Wherever necessary
• Extending the semantic definitions of the business terms in the data model
• Adding conditions to enable requirements not foreseen by the core European invoice (fakturan) model and EN 16931.

Since PINT is an addition to Peppol BIS-Billing 3.0, BIS-Billing 3.0 is compatible with PINT. Specifications for e-invoices in other countries must also be compatible with PINT.

How to Register to the Peppol Network

Joining the Peppol network is relatively simple. Here’s how:

1. Select an Access Point
   Access Points connect you to the Peppol network. Select a provider that meets business needs in terms of services, pricing, and integrations.
2. Obtain a Peppol ID
   A unique Peppol ID acts as an address (address) within the network. This identification enables other participants to identify and connect with your business.
3. Configure All Systems
   Work with the Access Point provider to integrate all Peppol standards into your legacy programmes.
4. Test and Go
   Before fully implementing Peppol, conduct tests to ensure seamless document exchange. Once verified, you’re ready to transact via the network.

Do You Need a Peppol ID?

Yes, a Peppol ID is required if you want to participate in the network. This specific identifier ensures that trading partners and government entities within Peppol can accurately recognise your business.

The Peppol ID is usually linked to registration details, like a VAT number or national business identifier. This helps to ensure accuracy and compliance with local regulations.

Is a Peppol Number the Same as a VAT Code or GLN?

While a Peppol ID may incorporate some of the same elements of a VAT code or Global Location Number (GLN), it is not the same.

A Peppol ID is specifically designed to be read (läs) and used within the Peppol network. In comparison, VAT codes and GLNs serve broader purposes in tax and supply chain management, respectively.

How Peppol is Helping Global Markets Evolve

Peppol is revolutionising global markets in many ways, including:

• Reducing complexities and breaking down barriers by standardising cross-border transactions.
• Driving digital transformation and encouraging the adoption of e-invoicing (e-fakturor) solutions.
• Promoting transparency by increasing visibility and accountability, combating fraud.
• Facilitates stronger collaboration between public and private sectors, fostering innovation.

Summing It Up

As global markets continuously grow and become more interconnected, the need for standardised, efficient, and secure digital solutions (lösningar) is crucial. The Peppol network addresses these demands by providing a universal space to simplify cross-border transactions, reduce costs, and enhance global compliance.

From its origins in Europe to international adoption, Peppol is a powerful tool for companies and governments seeking to thrive in an ever-changing digital age. Whether you’re a multinational enterprise or a small startup, the advantages of using the Peppol network are clear: streamlined processes, improved interoperability, and the ability to compete globally.

Adopting Peppol isn’t just about keeping up with the times. It’s also about staying ahead of the competition in a rapidly evolving economy. By joining this space, organisations unlock new opportunities and set the stage for sustained growth in an increasingly virtual world. Ready to try a solution that seamlessly integrates Peppol into your current workflows? Get started with Tipalti today!