From paper to Peppol
Over the past 20 years, invoicing between organisations has evolved from paper to Peppol. Typically, organisations have a combination of different delivery channels. In this assessment, the mix of channels and formats and the proportions for each determine your level of invoicing maturity.
First generation
In the first generation (1G) of modern invoicing, businesses send paper invoices via post to their buyers.
Second generation
In the second generation (2G) of modern invoicing, businesses email invoices (as a PDF) to their customers.
Third generation
The third generation (3G) of invoicing (which is also referred to as eInvoicing) involves businesses developing system-to-system integrations with suitably sized buyers and customers to send and receive invoice and order data directly via electronic data interchange (EDI).
This is also referred to as the 2-corner model where the supplier and buyer are integrated on a one-to-one relationship.
Fourth generation
The fourth generation (4G) of invoicing involves building closed networks to scale up EDI in a way that suppliers and buyers can integrate more easily using the same service provider as opposed to requiring a new 1–1 integration each time.
Fifth generation
In the fifth generation (5G) of invoicing, existing procurement systems are enabled for eInvoicing via open networks like Peppol.
An open network, with regulated and standardised formats, addresses the issues of fragmented standards, security, reliability, scalability, affordability, adoption, and innovation.
Peppol eInvoicing is the most common, interoperable standard for eInvoicing today across the globe.
Maintain multiple channels
Most organisations will maintain multiple channels that each fit within different maturity levels – that is, an entity at the 5G level using Peppol may still maintain point-to-point EDI connections (3G) and receive some vendor invoices as PDF via email (2G).
Over time, trading partners on these legacy channels can be migrated to more efficient and mature channels as appropriate. In some cases, it can be beneficial for an entity to skip the 3G and 4G levels entirely because open interoperable networks and standards like Peppol can substitute or replace EDI direct connections or networks.
The following table provides a detailed comparison of the relevant features by maturity level, highlighting the potential opportunities and savings that Peppol can unlock for your business.
|
Feature |
1G – Paper |
2G – Email |
3G – Point-to-point EDI |
4G – 3-corner EDI |
5G – open network |
|---|---|---|---|---|---|
|
Data entry |
Manual |
Semi-Automated |
Automated |
Automated |
Automated |
|
Accuracy |
Low |
Low |
High |
High |
High |
|
Data structure |
Unstructured |
Semi-structured |
Structured |
Structured |
Structured |
|
Sustainability |
Poor |
Good |
Good |
Good |
Great |
|
Risk of fraud |
High |
High |
Low |
Medium |
Low |
|
Reach |
High |
High |
Low |
Medium |
High |
|
Complexity |
Low |
Low |
High |
Medium |
Medium |
|
Setup costs |
Low |
Low |
High |
Medium |
Low |
|
Maintenance cost |
Low |
Low |
High |
Medium |
Medium |
|
Risk of losing invoices |
High |
High |
Low |
Low |
Low |
|
Risk of late payments |
High |
High |
Low |
Low |
Low |