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Business case considerations

Last updated 24 July 2023

Peppol overview and benefits

Peppol eInvoicing

Peppol eInvoicing is the direct exchange of standardised, structured invoice data between buyers’ and suppliers’ software via a network of certified service providers. eInvoicing eliminates the need for emails with PDF attachments, making transactions more efficient, accurate, and secure. eInvoicing is available to businesses of all sizes and, with a one-time setup, they can send and receive eInvoices with any participant on the Peppol network.

Peppol is a globally recognised standard for sending eInvoices and other procure-to-pay documents (such as catalogue, purchase order, and invoice response). The Peppol network, document specifications, and multilateral agreements make global business processes interoperable by standardising the way information is structured and exchanged.

In simple terms, Peppol enables an open, interoperable environment by providing a common framework and protocol for businesses and governments to exchange business documents using their existing software.

Australia, New Zealand, Singapore, and Japan have all adopted Peppol to standardise public procurement and business-to-business transactions because Peppol is an open network that connects many platforms and users, is well-established, and is used in more than 40 countries worldwide. More than 600,000 business and government entities are registered to receive eInvoices on the Peppol network.

In Australia, there are now over 100 Commonwealth government agencies, over 200 state government agencies and a growing number of local governments enabled for eInvoicing. The Government is committed to Peppol as enduring economic infrastructure that will support Australia’s growing digital economy, help transform how Australian businesses do business, and maximise opportunities for SMEs. Since 2022, the number of Australian businesses registered on the network has tripled. The more businesses that join the network, the greater the benefits for the participants and the economy.

The Australian Peppol Authority

The Peppol framework is managed by OpenPeppol, an international not-for-profit organisation established under Belgian law in 2012.

OpenPeppol gives authority to the relevant countries to manage the Peppol framework for its members. In Australia, the Australian Taxation Office (ATO) has been established by the government as the Peppol Authority.

In this role, the ATO:

defines Australian requirements for the use of the Peppol standards – for example, invoice specifications to support GST tax invoices

administers accreditation of access points for Australia

educates, promotes and supports the adoption of Peppol standards across governments and the business community

works with the digital service provider and business communities to ensure the Peppol framework is suitable and implemented consistently across Australia.

The ATO does not receive a copy of the eInvoice and is not able to view the contents of any eInvoices transmitted between entities. eInvoicing is being implemented in Australia as a productivity measure and is not used for tax compliance.

The Peppol network

To use eInvoicing, your business and your trading partners need to connect to the Peppol network.

Each buyer and supplier connect their billing, accounting, or ERP system to the network via a Peppol access point, a service provider which acts as a gatekeeper for data transmitted through the network. Access points facilitate the exchange of invoice information between the buyer and supplier, ensuring secure transmission and data integrity. Conceptually, the exchange of data is based on the Peppol 4-corner model. For more information see the Peppol network.

Table 1: Terminology

Term

Definition

Peppol Directory

The Peppol network address register of all entities registered to receive Peppol eInvoices and other documents.

https://directory.peppol.eu/publicExternal Link

Peppol access point

Service providers who provide access to the Peppol network. Access points are certified by each country’s Peppol Authority under agreements overseen by OpenPeppol – see https://peppol.org/peppol-interoperability-framework/External Link

4-corner model

The 4-corner model refers to an operating model where companies and public sector organisations can choose their own access points (service provider). Together, Peppol service providers form a messaging service and network.

Peppol and electronic data interchange

Businesses have exchanged electronic documents such as invoices for decades through different channels, including:

  • electronic data interchange (EDI)
  • data entry portals
  • data file transfers.

These systems are efficient and streamline the buying process, but they aren't universal and are usually proprietary. This means suppliers must connect to multiple systems used by different buyers, creating inefficiencies, cost burdens, and trading barriers.

The Peppol framework complements EDI and other channels as a common standard for exchanging digital business documents. This helps businesses who transact with trading partners through multiple EDI networks to avoid multiple connections and high costs.

The calculations in this assessment combine EDI and future Peppol invoice volumes as they both support the exchange of structured data, enable processing automation, and offer greater security than email. However, Peppol is a contemporary and more cost-effective channel than EDI.

Benefits of Peppol eInvoicing

Key benefits of eInvoicing include: 

  • improved cyber security by reducing use of email as the delivery channel and the risk of fake or compromised invoices
  • improved efficiency through the removal of manual processes and follow up
  • aiding faster payments as invoices are accurate, delivered to the correct destination, and can be processed faster through automation
  • improved ability to achieve environmental, social, and governance objectives.

In addition, eInvoicing may help businesses subject to the payment times reporting scheme to report their payment times more easily and accurately for small business suppliers by providing clarity on ‘when the clock starts’ on invoice payment times.

Businesses may also need to consider other intangible benefits of eInvoicing, including:

  • future-proofing your organisation when doing business with government and organisations preferring or requiring eInvoicing
  • improved team morale (once embedded) from fewer errors and time freed up to spend on higher-value business tasks
  • opportunity to boost your reputation by positioning your organisation as a good corporate citizen and a preferred organisation business
  • industry leadership and potential promotional opportunities.

Early observations of realised benefits by Australian business and government entities include:

  • a large utility provider reporting a 7-day reduction in payment times from customers after implementing Peppol eInvoicing, with chronic late-paying customers now paying on-time or earlier
  • a large retailer reporting customers asking them to stop sending PDF invoices soon after they switched to eInvoicing due to increased confidence in eInvoicing and operational improvements
  • one local council reporting a reduction in invoice and payment processing times from 4 weeks to 1 week. 

For more information see Benefits of eInvoicing | Australian Taxation Office (ato.gov.au).

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