PEPPOL e-invoicing: Lessons from Europe

The PEPPOL e-invoicing network is live in Australia and New Zealand and e-invoicing transactions are now flowing freely. As the network continues to grow in both connections and volume, there is a ground swell of interest fuelled by the excitement and enthusiasm of the early adopters. However, for some there is a natural scepticism about adoption rates and market predictions. For some people, the sour taste of previously discarded buzzwords has instilled a more cautious optimism to the promise of PEPPOL. A desire to be ‘leading edge, not bleeding edge’ while also avoiding the potential pitfalls of falling victim to an overhyped technology has some people adopting a ‘wait and see’ approach. While there is nothing inherently wrong with this plan, it does however warrant a response and a message of assurance.

I was recently speaking with someone who freely admits to being a bit cautious by nature. During our conversation this person wondered aloud how effective PEPPOL e-invoicing has actually been in Europe and whether we will see wide-spread adoption in NZ and Australia. While at the time I gave an answer that was intended to reassure, motivate, and educate all at the same time, the reality is that the path the European countries have laid for the world is a bit more involved than what can be encompassed by an elevator-pitch answer. Yes, PEPPOL e-invoicing is new, innovative, and can be a game changer for many organisations. Yes, we can look at Europe to see the success they have had to date. Yes, we can differentiate e-invoicing from other technology buzzwords (cough cough RPA cough cough) to show why it’s not just a flash in the pan. However, without basing that answer on examples and considering the specifics, that answer offers little reassurance and risks being received as an empty platitude.

It’s challenging to examine Europe as a single case study given that the journey of each country has been different. While we often refer to the PEPPOL region as “Europe”, it should be noted that not every European country has fully adopted e-invoicing yet. Most of those that have embraced e-invoicing have done so with gusto and legislated it into common usage. However, some countries took a less authoritarian approach where usage was encouraged but not mandated.  Some countries passed their laws in this area almost a decade ago, whereas others are only just coming into effect now with their phased approach only just recently coming to fruition.

The PEPPOL project began back in 2008 with the goal of...

…simplifying electronic procurement across borders by developing technology standards that could be implemented across all governments within Europe”. 

That project concluded in 2012 with the delivery of the Interoperability Standards that saw the formation of OpenPEPPOL. From that point on, various European countries signed up to OpenPEPPOL and began the process of incorporating these standards into their economies so they could be adopted and implemented within their jurisdictions.

If we look at France as an example, they mandated e-Invoicing for the French State to begin from 01 January 2012. However, it wasn’t until the start of 2017 that the mandate applied to contracting authorities, 2018 & 2019 for intermediate and medium sized enterprises, and only just this year (Jan 2020) for small enterprises. This makes it difficult to gauge the uptake of e-invoicing across the country as a whole given the staggered starting blocks each market segment began from.

By contrast, in January 2018 Poland began their organisational changes to see the newly formed Ministry of Entrepreneurship and Technology emerge from the previously named Ministry of Economic Development, the former being the new PEPPOL Authority for Poland. The Polish legislation on e-invoicing was passed in September that same year and came into force less than a year ago on 18 April 2019. 

While it’s clear that e-invoicing for government agencies in both these countries is effective, practical, and still growing, most people view that feedback as anecdotal or perhaps even just as lip service. So the next question often asked is whether there are numbers around the growth of e-invoicing in Europe.

In terms of up-to-date e-invoicing volumes, again it is difficult paint a combined ‘European’ picture given that the information isn’t necessarily available, that the information is not always in the same format (e.g.: Percentage change vs total numbers), that changes are happening at company levels almost daily, and that the various countries are at different stages of PEPPOL maturity. 

However, we can find some statistics at an individual country level. For example, Denmark estimates that 99% of B2G invoices are now on the PEPPOL network. Norway goes a step further and gives us some high-level numbers of having more than 121,000 registered PEPPOL receivers using the 41 production access points. This generates a monthly transaction volume of more than 8 million transactions per month. Storecove are one of several dozen providers that have European accreditation and there is currently more than €1,000,000,000 in invoice values per annum passing through our access point alone. 

None of these numbers are small, all of them are significant, and when considered as pieces of a larger whole, together they start to paint a picture of the PEPPOL success in Europe. 

What does all this mean for Australia and New Zealand?

PEPPOL e-invoicing in Europe gives us a glimpse into our future of what could happen in this part of the world. Though their current state shouldn’t be considered our final destination. While PEPPOL is legislatively embedded in these European countries, it is also fair to say that for many companies and agencies operating in those jurisdictions, e-invoicing is still a work in process. Adoption and growth are initially driven by government and those companies in government supply chains. However, once government suppliers are connected, the expansion beyond B2G into B2B will be organic. If a company is PEPPOL enabled in order to transact with government, it is a natural extension to then be e-invoicing all of your commercial customers, and also to receive e-invoices from your suppliers. 

There is also scope for the EDI market to drive adoption with PEPPOL being an ideal vehicle for high invoice volume business partnerships, internal re-billing processes from head offices to branches & franchises, and also for international transactions.

Australia is mandating that government organisations and public agencies get connected and transact with e-invoices. The 5-day payment term incentive is being offered as the proverbial carrot for private companies (that have <$1M contracts) to send their supplier invoices as e-invoices. This is seeing both a surge in activity from government agencies, as well as the beginnings of a ground swell of interest from those in a government supply chain who want their payments to happen more quickly.

New Zealand’s approach so far has been one that promotes connection and offers advice, but holds back from taking an enforcement stance. There is a desire to see what the organic uptake of PEPPOL e-invoicing will be before pulling the twin levers of market incentives and legislative enforcement to encourage the adoption rates.

Ultimately, no matter which country you are in, there is a growing sense of inevitability to e-invoicing.

So how do we get started?

The easy answer, and perhaps a ‘salesy’ answer, is simply so say you need to get in touch with us. The slightly longer answer is that it depends on what kind of organisation you are. If you are a private company then it may depend on whether your ERP provider plans to enable PEPPOL e-invoicing as part of their platform, or whether you need to take steps independent of your existing partners to get connected. 

For software vendors with Accounts Payable / Accounts Receivable solutions in market as well as the ERP vendors themselves, this could mean trying to run the gauntlet of seeking their own accreditation from ATO / MBIE to provide the service themselves. Or it could be that it’s preferable to acquire an ‘Access Point as a Service’ to essentially white label the functionality needed to complement their existing solutions and platforms. 

If you are a public entity or government agency, you could consider any of the above paths. 

Ultimately, no matter what type of organisation you are or which path you opt to take, Storecove can help with all the advice and support you need to get started.

Kris Elliott

Sales Manager – AUS/NZ