PEPPOL set to deliver e-invoicing step-change
The PEPPOL framework is set to revolutionise European e-invoicing and do for electronic trading what interoperability agreements between mobile operators have done since the 1990s, says Richard Manson, commercial director of CloudTrade
Later this month, the National Health Service is set to announce the inaugural list of vendors, who will act as ‘access points’ for its PEPPOL (Pan European Public Procurement On-line) framework. Public sector organisations, in addition to organisations within the National Health Service, will now be able to access the full range of PEPPOL framework services the via these ‘Access Points’.
PEPPOL was conceived as a means of creating a cross border messaging standard to enable suppliers to trade with public sector organisations across Europe. In the UK, PEPPOL is a central pillar of the Government’s eProcurement strategy for the NHS. The aim of PEPPOL is to increase the use of eProcurement within the NHS and to make trading with the NHS easier for business of all sizes.
Ultimately, PEPPOL aims to save money within public sector back offices, which can be used for front line services. PEPPOL enables documents such as purchase orders and invoices to be exchanged in a standard way electronically between buyers and sellers, without any manual intervention.
As one of five providers who worked with the Department of Health on the initial PEPPOL Demonstration of Technology in 2015, we helped test and validate a framework that will help simplify eProcurement, as well as the selection and award process for public sector work, which opens new and exciting opportunities up to SMEs from across Europe.
How does PEPPOL work in the UK?
In the new world, an NHS buyer will be able to connect to the PEPPOL network via an ‘Access Point’. Electronic invoices, orders and other purchase related documents will be sent, and can be received, via the buyer’s Access Point to the supplier via the supplier’s own Access Point.
This ‘four cornered model’ will allow an NHS buyer to trade with any supplier connected to PEPPOL. Similarly, a supplier will be able to trade with all NHS buyers (and other public and private sector organisations) on PEPPOL.
There is no doubt in my mind that, PEPPOL will change the way the NHS does business. Six demonstrator sites were selected at the beginning of 2016, and by 2020 all NHS Trusts are expected to be up and running. Once live, all suppliers will be required to send electronic invoices through a PEPPOL compliant Access Point. If you are an NHS buyer, PEPPOL will mean those business processes are faster and more efficient as paper becomes a thing of the past.
For suppliers trading with the NHS, selected Access Points will enable your business to be PEPPOL-ready with minimum changes to your IT systems or processes. On-boarding is simple, taking a matter of minutes rather than days or weeks, and trading relations are improved as you can be paid more efficiently and with no need to keep chasing on invoices that keep getting lost along the way.
E-invoicing and its limitations in Europe
PEPPOL does for electronic trading, what interoperability agreements between mobile operators have done since the 1990s: enabling suppliers to trade with public sector organisations across Europe without the need to worry about differing document standards or communication protocols.
Unlike traditional, paper-based invoices, e-invoices provide all their data in a digital format. Thus, e-invoicing offers substantial benefits over paper invoicing, not least because they can be automated.
The fact that e-invoices can be generated and distributed at the touch of a button from the issuer’s financial system to those of the recipient is hugely cost and time efficient. They also offer shorter payment delays, fewer errors through intelligent validation processes, reduced printing and postage costs and most importantly, can be fully automated.
Adoption rates of e-invoices are still relatively low and vary widely across Europe. However, in some European Countries, public sector initiatives have emerged to make e-invoicing mandatory for public procurement. These projects will obviously be critical to ensuing the market penetration of e-invoicing.
PEPPOL will tie all of that together, as it aims to make all electronic communication between businesses and public sector organisations possible throughout the EU. The fact that it covers all procurement processes, including the exchange of invoices, means many of the barriers to the uptake of e-invoicing will disappear as suppliers and buyers become more tightly integrated.
The interoperability of e-invoicing solutions should provide both buyers and suppliers with the ability to exchange e-invoices across multiple technologies and organisational boundaries, based on common legal requirements, business processes and technical standards.
There are still challenges to bear in mind and we are not there yet. The challenges facing a common approach only increase as you look across Europe, with its borders, language barriers, different legislation and bad practices. In the current environment, there is no globally used standard for e-invoicing. The diversity of data and usage requirements, and very different approaches to their implementation, have led to market fragmentation.
Conclusion - Is PEPPOL the next incarnation of e-invoicing in Europe and beyond?
Going back to my mobile phone network analogy. PEPPOL is going to be a step change that won’t stop at its first incarnation, it will carry on being refined and re-born as e-invoicing develops and that is tremendously exciting. Its first incarnation may not be perfect, but it offers undoubted potential. What I mean is that we all wanted to have a mobile phone even when we were charged much more per call by the mobile networks, but as mobile networks have become more sophisticated and more users join them, they have developed to a point where we get much more for our money than we used to. PEPPOL will, no doubt, be the same and by joining the revolution, public sector and their suppliers will help it develop faster and improve.
Richard Manson is Commercial Director for CloudTrade
(Find out more about the PEPPOL framework by signing up for one of our webinars For further information go to: http://www.cloudtradenetwork.com/ or contact Nick Jones; 07832 115362, firstname.lastname@example.org )