Over the past 20 years, the evolution of invoicing between organisations has developed from paper invoicing to Peppol, an open eInvoicing network. Typically, organisations have a combination of different delivery methods. In this assessment, the mix of channels and formats, and proportion of invoices sent via each channel, determine your level of invoicing maturity.
- The first generation (1G) of modern invoicing is where businesses are sending paper invoices via post to their buyers.
- The second generation (2G) of modern invoicing is where businesses send the invoice to their customer via email as a PDF.
- The third generation (3G) of invoicing, that is also referred to as eInvoicing, is where businesses develop 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.
- The fourth generation (4G) of invoicing is where system integrators, involved in the implementation of point-to-point EDI integrations for large businesses, build their own closed networks to scale up EDI integrations in a way that suppliers and buyers can integrate easier using the same service provider as opposed to requiring a new 1-1 integration each time.
- The fifth generation (5G) of invoicing is where 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.
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, 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/or 4G levels entirely because open interoperable networks and standards like Peppol can substitute or replace EDI direct connections or networks.
The table below 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 |
2G |
3G |
4G |
5G |
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 |