The "P" word

Peppol. It’s the “P” word that is popping up more and more frequently in tech publications and online forums across Australia and New Zealand. Usually found in front of the word ‘e-Invoicing’, it can have varying meanings for those that have encountered this word depending on the context. Some use it to describe a document standard or set of specifications. Others use it in reference to the global network through which e-procurement documents are exchanged. Still others use it when referring to the organisation that governs both. The truth lies in the middle as the combination of all three.  

As the adoption of e-invoicing continues to accelerate in this region it is important that we understand the significance of the “P” word and what it means if it is absent. A misunderstanding between the terms ‘e-Invoicing’ and ‘Peppol e-Invoicing’ is emerging that can have significant consequences on the functionality of your solution. While Peppol e-Invoicing is regulated (to a degree) by the accreditation process for Peppol Access Point providers and governed by the OpenPEPPOL agreements, e-Invoicing in general (i.e.: non-Peppol e-Invoicing) is not. 

Unfortunately engaging with an Accredited Peppol Access Points is not necessarily a guarantee that the e-Invoicing solution you are considering is in fact one based on the Peppol specifications and/or is using the Peppol network. This is largely because some of the providers have a pedigree based on EDI solutions and e-Invoicing integration that pre-dates Peppol in this region. It is important to be clear on what an e-Invoice is and why it’s the “P” word is part of your solution.

While there are other global standards for e-Invoicing, Peppol is the one administered by ATO & MBIE, and endorsed by both the Australian and New Zealand governments as the chosen national standard in both countries.  Peppol not only details the specifications around how e-Invoicing documents should be crafted and interpreted, but it also provides a closely regulated network through which the wider suite of e-Procurement documents can be exchanged.

Part of what makes Peppol so appealing is the ease through which interoperability is achieved. Historically, EDI was delivered within specific supply chains by a common development partner or “Value Added Network” (VAN). That often required the buyer and the seller to use the same VAN, and sometimes one of the trading partners benefitted more owing to a commercial power imbalance (e.g.: A large supplier dictating purchasing processes to buyers, or a large buyer insisting on specific systems for anyone wanting to sell to them). This meant these systems typically favoured the larger party and were geared around making their life easier. The result is different processes, formats, supplier portals, and standards depending on whom a business was transacting with. For example, a small company might be selling the same products to competing supermarket chains but are having to jump through completely different technical hoops to do so. The added cost and complexity generally put this type of automation out of the reach of small businesses.

Peppol was designed to very deliberately avoid that situation and level the playing field between trading partners. The four corner model that I imagine we are all growing tired of seeing in ‘What is Peppol?’ white papers and presentations means that trading partners can use different providers to achieve their e-Invoicing integration goals. But more than that, the adoption of Peppol in AU/NZ means that many of the interoperability differences between those closed supply chains are removed in order to create not just a national standard, but also a Trans-Tasman standard for e-Invoicing.

There are two risks emerging in the e-Invoicing market at the moment that, if left unaddressed, could put at risk the interoperability promise of Peppol. The first is non-Peppol solutions. If the provider you have chosen also happens to be the provider that has enabled the trading partner(s) that are encouraging your adoption of e-Invoicing, you need to ensure that the full Peppol solution is being delivered. This will empower you to go on to e-transact with others in your supply chain and customer base. If, for example, that provider is using the Peppol specifications as a base for document formats but not actually delivering them via the Peppol network then you wouldn’t actually be Peppol enabled. If they are utilising a closed proprietary communication channel then you aren’t Peppol e-Invoicing. What you would have is a closed supply chain network that could be potentially fraught with the same complications of yesteryears.

The second risk is when there is a stricter implementation of the Peppol standards which in turn compromises interoperability. The Peppol e-Invoice is made up of a combination of mandatory fields and optional fields. While certainly some of the optional fields are strongly recommended and their use is considered ‘best practice’, nevertheless they are still optional and a Peppol e-Invoice may still be valid even if those fields aren’t used. (e.g.: No purchase order number is not an invalid Peppol e-Invoice, even if the buyer requires one for their Accounts Payable process). To put it more plainly, there is a danger in requiring your provider to enforce your Accounts Payable rules at an Access Point level. Just as you wouldn’t ask that your Postie open your mail and not deliver posted invoices absent a PO number, so too should you not expect a Peppol Access Point to reject / not deliver an e-Invoicing for the same rationale. An experienced Access Point provider would offer guidance and push back on those requirements, pointing out how a valid invoice should almost always be received first and then processed according to your business rules second. 

I’ve written before about the ‘digital reciprocity’ of Peppol e-Invoicing, although the context at the time was that everyone ought to consider both sending and receiving options and not simply one or the other. However, that phrase could also apply more generally to all organisations within the Peppol community. We can’t just think about the immediate commercial interests of ourselves or our customers, and we also must consider the wider implications on the industry as a whole. 

So if you are looking at an e-Invoicing solution, make sure it has the “P” word in front of it.

Kris Elliott

Sales Manager – AUS/NZ