Now the PEPPOL network for e-invoicing is in place – how will organisations benefit from its four-corner model

The future of e-invoicing is now available for businesses and government agencies in Europe and the UK.

This Spring the NHS opened its doors to and started trading via the new PEPPOL (Pan European Public Procurement On-line) network. For the first-time, health service providers and their suppliers will be sending and receiving orders and e-invoices across the PEPPOL network.    

PEPPOL aims to save money within public sector back offices, which can be used for front line services. The network enables documents, such as purchase orders and invoices, to be exchanged in a standard way electronically between buyers and sellers, without any manual intervention. 

PEPPOL was conceived as a means of creating a cross border messaging standard to enable suppliers to trade with public sector organisations across Europe. In the UK, PEPPOL is a central pillar of the Government’s eProcurement strategy for the NHS. The aim of PEPPOL is to increase the use of eProcurement within the NHS and to make trading with the NHS easier for business of all sizes.

In the new world, an NHS buyer will be able to connect to the PEPPOL network via an ‘Access Point’. Electronic invoices, orders and other purchase related documents will be sent, and can be received, via the buyer’s Access Point to the supplier via the supplier’s own Access Point.   

There is no doubt in my mind that, PEPPOL will change the way the NHS does business. I believe that PEPPOL has the potential to revolutionise European e-invoicing and do for electronic trading what interoperability agreements between mobile operators have done since the 1990s. 

Six demonstrator sites were selected at the beginning of 2016, and by 2020 all NHS Trusts are expected to be up and running. Once live, all suppliers will be required to send electronic invoices through a PEPPOL compliant Access Point.  

If you are an NHS buyer, PEPPOL will mean those business processes are faster and more efficient as paper becomes a thing of the past. For suppliers, trading with the NHS via selected Access Points will enable your business to be PEPPOL-ready with minimum changes to your IT systems or processes.   

On-boarding is simple, taking a matter of minutes rather than days or weeks, and trading relations are improved, as you can be paid more efficiently and with no need to keep chasing on invoices that keep getting lost along the way. 

PEPPOL’s ‘four cornered model’ will allow an NHS buyer to trade with any supplier connected to PEPPOL.  Similarly, a supplier will be able to trade with all NHS buyers (and other public and private sector organisations) on PEPPOL.   

The different models of e-invoicing transfer move hand in hand with the evolution of e-invoicing.  At the inception of e-invoicing, where only EDI was used, the 2-corner model was the way in which two organisations directly exchanged data.  This moved forward, as other methods of e-invoicing entered the market, and service provider became the 3rd corner between the supplier and buyer. Today, as we see the concept and development of PEPPOL and other global networks, the 4-corner model has arrived. Here is a summary of the different models of e-invoicing transfer and a guide to how they might benefit your organisation:   

The 2-Corner Model - The 2-corner model is a P2P (peer to peer) process where the supplier and buyer directly share e-documents with each other’s systems using EDI or XML files. 

The 3-Corner Model - The 3-corner model is where the supplier/buyer use the same third party service provider to process e-documents that pass between them. The third-party service provider can run their services through software or in the cloud and may offer services such as OCR, data extraction and mapping or data validation before producing the EDI and XML files required.

The 4 -Corner Model - The 4-corner model is where the supplier/buyer use different service providers to process e-documents that pass between them. Within this model both service providers can either run their services through software or in the cloud and offer the additional services of OCR, data extraction and mapping or data validation to their client. In the 4-corner model the service provider will also need to work with the other clients’ service provider to transfer the documents. 

This can be likened to the model used for mobile telephones where each mobile phone is assigned to a network supplier and they must work together to connect their client.  The service providers have agreed to be interoperable, so that once a supplier is connected to a network they become part of the wider network and can exchange documentation with any buyer on the network. 

PEPPOL is based on the 4-corner model that enables companies and government organisations (such as the NHS) to exchange e-documents over an interoperable, European-wide network. Put simply, it offers a standardised network to connect business and organisations for electronic ordering, shipping and invoicing. Users will be able to connect to all other users through Certified Access Points. Each user will have their own unique identifier or address, a bit like how our phone numbers work.   

For an e-invoicing solution to be a success in your organization its worth remembering that you needs to achieve high supplier adoption rates, and to do this your solution needs to be simple to use and non-disruptive to your suppliers: 

  • Don’t ask suppliers to change their applications or infrastructure to send XML or EDI
  • Don’t ask suppliers to raise their invoice in their own accounting package and then do it again in a 3rd party portal

By adopting these principles, you can be confident of driving supplier adoption rates in your PEPPOL and e-invoicing programmes. 

Going back to my mobile phone network analogy. PEPPOL is going to be a step change that won’t stop at its first incarnation, it will carry on being refined and re-born as e-invoicing develops and that is tremendously exciting.  As a result, PEPPOL’s first incarnation may not be perfect, but it offers undoubted potential. 

What I mean is that we all wanted to have a mobile phone even if we were being charged much more per call by the mobile networks, but as mobile networks have become more sophisticated and more users join them, they have developed to a point where we get much more for our money than we used to.  PEPPOL will, no doubt, be the same and by joining the revolution, public sector and their suppliers will help it develop faster and improve.      

If you want to find out more about PEPPOL. Register with CloudTrade as your supplier PEPPOL Certified Access Point. 

Richard Manson, Commercial Director, CloudTrade

Image Credit: peppol.eu