Peppol e-Invoicing Guide: Simplifying Global Business Transactions

Peppol, or Pan-European Public Procurement On-Line, is an open and standardised network intended to make B2B transactions easier to conduct, including electronic invoicing, procurement and other business documents. Peppol was first developed within the European Union but has quickly gained international usage because of its simple and effective method of conducting electronic business transactions.  

Peppol makes and protects the electronic delivery of business-critical documents providing a new and streamlined alternative for modern invoicing and procurement.

In the past, companies used to create invoices in their internal accounting system, convert them to electronic ones like PDFs or send them out either via mail or hard copies physically to their trading partners. The below process used to be delayed as the buyers had to manually enter the invoice data into their own systems. Peppol makes it easier by linking their accouting software or other business applications directly into the network.

What is PEPPOL?

Peppol is a framework that enables companies to send invoices, orders, confirmations, catalogues and other business documents seamlessly across borders. It consists of three main components:   

• Network: Allows business partners to send and receive business documents entirely over the internet. 
• Format: Standardized formats for electronic documents, such as e-invoices. 
• Legislation: EU legislation sets out Member states’ obligations and how peppol should be governed and administered via the non-profit organization OpenPeppol.

 

How does Peppol work?

In order to understand the parts separately, it is important to understand why Peppol. Peppol is an international standard through which organizations and companies can exchange electronic documents safely, uniformly, and efficiently. Having a standardized infrastructure and clearly defined operating rules, Peppol makes interoperability with different systems and service providers easy. 
The following are the important elements that make this possible: 

• Standardized message types (Peppol BIS): Predefined types of invoices, orders, catalogs, and responses.
• Common digital infrastructure: A standardized technological platform for fluid communication.
• Central registry: Allows for simple identification and messaging functionality between users.
• Clear guidelines: Rules and regulations streamlining interactions between network participants and providers.

Businesses exchange messages via certified Peppol service providers functioning as access points, which link directly to the network, reducing the need for complicated agreements or costly technological setups.

The Four-Corner Model:

One of the main characteristics of the Peppol framework is its interoperable four-corner model, through which secure, efficient, and interoperable electronic exchange of documents among organizations is possible, irrespective of their underlying systems or geographical location.

The model involves four main parties:

• The Sender: The organization that is creating the electronic document, for example, invoice or purchase order.
• The Sender's Access Point: An accredited service provider or system that securely sends the document into the Peppol network in the name of the sender, with it being in Peppol's standards and formats.
• The Access Point of the Receiver: The respective service provider to which the document is delivered by the network, verifies it, and delivers it to the targeted recipient in a suitable format.
• The Receiver: The organization wanted to receive and handle the document.

This model ensures interoperability and compliance across different systems and countries. 

The network relies on unique identifiers/ peppol IDs for message routing: 

1. Format example: “0007:5567321707” for Swedish organization numbers.
2. Format example: “0088:1234567891234” for GLN numbers

For receiving e-invoices and documents, a Peppol ID is mandatory, but nor required for sending. 

Supported document standards:

All documents exchanged over peppol network must confirm to one of two structured XML-based formats, Universal Business Language (UBL) or the Cross Industry Invoice (CII). UBL offers a comprehensive, standardized set of electronic business document templates compatible with most modern accounting and ERP systems, while CII enables efficient document exchange between diverse trading partners and platforms. 

Peppol BIS message types and profiles

The Peppol network works on a system of standardized messaging protocols that enable secure and efficient transfer of any type of electronic business document.

 

Peppol network message profiles build distinct sets of data requirements, structures, and rules specific to each business function, for example, invoicing, procurement, or logistics. Message types define the specific kinds of business messages, for example, invoices, credit notes, or order confirmations, being exchanged in the standardized profiles.

Some of the main Peppol BIS Profiles and Message Types are:

• BIS Billing: The Peppol standard electronic invoice form used to support smooth, automatic invoicing between trading partners.

• BIS Credit Note: A standardized message type for sending credit notes, adjustments, or corrections concerning previously issued invoices.

• BIS Invoice Response: Offers real-time update of processing statuses on invoices to support improved financial management and cash flow.

• BIS Order Only, Ordering, and Advanced Ordering: A set of profiles enabling procurement processes that vary from basic order placement to sophisticated, multi-step order management processes.

• BIS Despatch Advice: A formal notification message containing advance shipping and logistics details that allow for a seamless coordination of the suppliers and buyers.

• BIS Catalogue: Enables electronic exchange of product data and price information via standardized product catalogues.

• BIS Punch Out: Facilitates interactive B2B e-commerce experiences by enabling buyers to log in to supplier web catalogues directly from within their procurement systems.

   

  Why Peppol?

   

• Taking advantage of the Peppol infrastructure provides various quantifiable benefits to contemporary businesses:

• Interoperability: Facilitates smooth, standardized communication between various systems, platforms, and across international boundaries, promoting increased operational flexibility.

• Operational Efficiency: Removes the requirement for one-off technical integrations or reciprocal arrangements, lowering onboarding times and making transaction processes easier.

• Cost Optimization: Minimizes infrastructure and maintenance expenses while offering low or no transaction fees, contributing to improved operational margins.

• Regulatory Compliance: Ensures adherence to EU directives and other international standards by incorporating strict validation and quality controls within the network’s messaging protocols.

   

  How to join Peppol Network:

   

• Integrating your company into the Peppol network is a simple and easy process, with the aim of reducing complexity and cost of implementation. The processes of joining are as follows:

• Step 1: Choose and sign up with an accredited Peppol Access Point provider — or a Peppol service provider — that enables your safe connection to the Peppol network.

• Step 2: Integrate Peppol functionality with your current ERP, accounting, or business management systems. Alternatively, you can use a cloud-based or online environment offered by your Access Point partner for immediate operational capability.

• Step 3: Purchase your own exclusive Peppol ID, which is your own personal identifier within the network, facilitating the secure receipt and exchange of electronic documents with your business partners.

Conclusion

• Peppol provides electronic business document interchange architecture that is secure, standardized, and very efficient, enabling companies to transform their document management, procurement, and invoicing processes. It must be noted that while the communication forms and base infrastructure are the same worldwide, every country has adopted the Peppol framework according to its national procurement legislation, compliance needs, and rules. Peppol's flexibility renders it an actual scalable and future-proof solution for native and foreign businesses alike. Accessing the network enables firms to optimize operations, remain compliant with regulations, and get ready to thrive in the next-generation digital economy.