Business-critical activities are going digital. Across the world, public organisations and private companies are mandating the use of e-invoicing, and other electronic procurement messages. Peppol, which began in Europe over 15 years ago, is leading the way in simplifying public sector and cross-border procurement processes, ensuring transparency, interoperability, and security. 

Peppol, which stands for Pan-European Public Procurement OnLine, is an international framework designed to facilitate the cross-border exchange of business-critical electronic documents and electronic invoices. 

Upon release in 2008, Peppol was initially designed to simplify trade between EU countries and make public procurement easier, but it has moved far beyond its original purpose. Today it is being used by hundreds of thousands of businesses and public institutions throughout the world to send safe and secure e-invoices and other business-crucial e-documents.

Peppol is not, per se, a platform for sending and receiving e-documents or invoices, but rather an infrastructure or network that aims to streamline and standardise e-document exchange. By connecting the existing platforms already in use by companies and public institutions, it allows them to send messages, e-documents and communicate through its network.

With the global acceleration in the digitalisation of business processes, and nowhere more so than in e-invoicing, Peppol’s capacity for interoperability between different platforms offers a resounding benefit. It allows different systems to speak to each other all across the world, aiding in global regulatory and legal compliance, while reducing the cost, and increasing the efficiency and reliability of billing and invoicing. 

Taking into account the implementation of e-invoicing mandates by governments throughout the world and Peppol’s widespread adoption as the infrastructure to fulfil those mandates, the Peppol network remains the leader. Simply consider it is already used extensively in 37 countries, 29 of them from Europe as well as Australia, Canada, New Zealand, Singapore, South Africa, the United States and more.

By facilitating an easier way to implement e-invoicing and other e-procurement processes, businesses can reduce operating costs by limiting manual handling of documents, reducing printing costs, minimising data entry errors, and avoiding the cost of archiving and storing paper documents.  

Businesses can conduct international trade more easily by having a more effective method to communicate electronically with foreign government buyers and other trading partners. It lowers the risk of fraud, and can increase the velocity at which invoices are paid.  It’s due to these benefits that Peppol’s use has been expanding. 

Think of Peppol as something like a digital notary for e-procurement documents. The architecture is made of suppliers and buyers who want to perform transactions but need to trust the validity of documents being sent.  The documents are sent between trusted service providers or Access Points (AP) in a process called the four-corner model.  Interoperability and data integrity are managed by these service providers. 

Four-corner model of e-invoicing

The four-corner model for e-invoice processing outlines a framework where the buyer, seller, and their respective service providers interact. The four corners refers to the buyer, seller, and the AP of each.

This model facilitates the electronic invoicing processes by emphasising collaboration between entities on a seamless e-delivery framework, where the exchange of standardised e-invoices takes place under strict protocols and the requirement for rigorous certificates. The four-corner model enhances efficiency and transparency in e-invoicing transactions.

There are advantages to using a four-corner model vs a two-corner or three-corner process.  A two-corner process is where buyers and sellers directly interact with each other, which is problematic because they have to mutually agree on e-document standards. This gets complicated when any organisation can have hundreds of buyers or suppliers. Gaining format acceptance by all of them is impossible.   A three-corner model uses a central third party to clear documents, but that requires buyers and sellers to agree to all work with the same service provider.  The four-corner model allows for more flexibility in choice of a service provider to accept e-documents, while allowing greater interoperability.  

Access Points 

The Peppol network is built around a global infrastructure of Access Points, which are how companies or government departments access the network’s e-document interoperable capabilities. At present, there are over 300 APs, but the number is growing.

The network is administered by distinct Peppol authorities aided by the guidelines set out by OpenPeppol – a non-profit consortium of businesses that meets to ensure that Peppol remains an effective infrastructure for e-document communication and electronic invoices. 

There are 15 distinct Peppol authorities, each specific to one country, (the EU is considered as one). When establishing the requirements for setting up an access point, the specific rules of the local Peppol authority must be adhered to, however, the process is the same throughout all countries or regions where the Peppol network operates.

Service Data Publisher (SMP) and Service Metadata Locator (SML) 

There are other service providers that enable the Peppol network to function effectively. Service data publishers contain information about a business’ electronic address.   Service Metadata Locators maintain essential information about participants, and both of these ensure accurate routing of Peppol messages. 

Peppol Business Interoperability Specifications (BIS) 

Peppol BIS is a vital component of how e-documents are successfully exchanged between all parties.  It defines the standard format that messages must be sent in, and all parties must comply with the use and implementation of this specification. It’s based on Universal Business Language (UBL) ISO/IEC 19845 standards (which are a set of open XML business document standards).  These standards define how the messages will be structured, how they are packaged, security settings, and address settings. 

Integrating Global Standards into Peppol E-Procurement:

To ensure the Peppol network maximizes its potential in facilitating global trade and procurement, the adoption of universal standards for product and location identification is essential. These include:

• Global Location Number (GLN): Facilitates precise identification of companies and locations, crucial for unambiguous transactions and logistics. 
• Global Trade Item Number (GTIN): Standardizes product identification across the Peppol network, enabling clear communication about items being procured or sold. 
• Global Data Synchronisation Network (GDSN): Ensures real-time, consistent data across all trading partners, enhancing the accuracy and efficiency of supply chain operations.

Peppol is used for several procurement process messages, including pre-award and post-award documents.  The most common types of documents are e-invoices, and it’s popularity is driven by regulatory requirements of EU business-to-government purchase mandates.  It’s also being used for catalogues, purchase orders, order confirmations, delivery notes, receipts, product data and remittance information.  

Peppol is also beginning to be used for continuous transaction controls (CTCs), a financial tax measure increasingly popular with governments to provide better value-added tax (VAT) reporting and control.  CTCs collect tax data as purchases occur, rather than waiting for businesses to remit tax returns, which is a vital step in reducing potential tax errors and fraud.  Peppol is in use in some CTC implementations due to its open, interoperability, and efficient manner of transferring electronic data and messages between two parties.

Peppol will continue to expand its global footprint by adding more participants in regions outside of Europe, including Asia-Pacific. Negotiations are underway to add the US and Canada, and Peppol is being promoted to countries in the Middle East, Africa, and Latin America.  

New use cases for Peppol are being worked on, including adding logistics as a possible future service domain.  The growth in regions and use cases will continue to expand Peppol’s utility. 

Peppol’s unique open-sourced approach to e-procurement and e-invoicing, non-centralised infrastructure, and its massive adoption by both private and public entities all over the world makes it a powerful, adaptable, and resilient solution for all organisations in the fast-evolving digitalisation of the business landscape. Taking into account its beginning, how far it has come, and how many committed stakeholders it has worldwide, it promises a bright future.