A thread linking all the elements of document digitisation in Europe: Peppol can thus be described as a common infrastructure designed for the digitalisation of documents:
- ensure interoperability and simplification,
- reduce bureaucracy and
- facilitate international trade.
This innovation is part of a European vision based on the dematerialisation of processes and the creation of a digital single market. This objective can be achieved by defining procedures based on shared standards, such as the European electronic invoice, of which Peppol is the main implementation tool. However, we must not think that they are suitable initiatives for a single, mere purpose. It is necessary to adopt a far-sighted mentality in order to understand how they represent the pieces of a broad puzzle that is going to be defined over time. Let’s see what this is about and why, with the support of these innovations, an increasingly favourable digital future for companies is being configured.
What is Peppol
Peppol, an acronym for Pan European Public Procurement Online, is a project launched in 2008 on the initiative of the European Commission. Since 2012, the OpenPeppol association has been responsible for the general management of the technical infrastructure, while the States have been responsible for regulating the service. Peppol is a standard communication channel, which is used for the transmission of business documents. Potentially, its use can also be expanded outside Europe – in fact, several countries have expressed interest in its adoption, such as Singapore.
Peppol is based on three fundamental elements:
- eDelivery Network – the real network infrastructure;
- Peppol BIS, Business interoperability specifications – the technical specifications needed to ensure interoperability in the exchange of business and tax documents;
- Peppol TIA, Transport infrastructure agreements – the rules for the use of network infrastructure.
Through Peppol’s infrastructure, documents in UBL XML format can be managed. It is a universal standard format that identifies about sixty commercial documents. Its intended use is already suggested by its name: UBL stands for Universal business language, while XML identifies the document format. Its realization is the result of an international collaboration aimed at identifying a library of standard XML documents, to facilitate exchanges and contribute to the interoperability of systems.
The UBL XML format is open, royalty-free and therefore its dissemination is free from any restrictions and rights. It has been specifically designed to meet the market needs of digitization, simplification and cost reduction. It is therefore not surprising that it is the format identified for the European e-invoice, as it perfectly embraces the objectives of this fulfillment: to give the possibility to public administrations and their suppliers to use a common language and processes for document exchange.
Advantages of the European electronic invoice and Peppol
2020 will be the year of the Peppol infrastructure in Italy. First of all, from April all public administrations will be obliged to accept the European electronic invoice, the obligation for central public administrations had already begun in April 2019. Private suppliers to the public sector are not obliged to use it by law, but for companies adopting this solution allows them to benefit from advantages in their commercial relations with public administrations. It should be borne in mind that the concept of European e-invoices was introduced by Directive 2014/55/EU for:
- Overcoming bureaucratic obstacles when participating in foreign procurement: interoperability is guaranteed by the system;
- Use a single tool whether you do business with Italian or foreign administrations;
- Manage the entire order cycle and consequently simplify processes;
- Adopt Peppol and UBL XML format for the transmission of documents via Order Sorting Node.
In fact, the second novelty that makes 2020 the year of Peppol, is the introduction of the obligation to use the Nodo Smistamento Ordini for the transmission of order documents between private suppliers and bodies of the National Health System. Peppol has been identified by the Italian legislator as one of the communication channels between the company management system and the Order Sorting Node (and, on the contrary, to receive documents from the NSO to the company management system).
The future scenario: an opportunity for companies
European electronic invoicing and Peppol offer companies the opportunity to expand their business without the burden of a bureaucratic brake, thus allowing even smaller businesses to remain competitive, through the adoption of digital solutions. From a European perspective, however, this is not the only objective. The scenario that can be analyzed with foresight contemplates a communion of services and tools that make the European Union “united” also from the point of view of digital infrastructures. We are moving towards a context of implementation that is not limited to mere document management, but extends to other fields: think, for example, of the possibilities related to fintech, in particular the supply chain finance and aspects of this area related to the order cycle. Not only that.
If the data are the oil of the future, European electronic invoicing acts as a drill. Through the digitization and standardization of the active and passive invoicing cycles, data is collected that is useful for analysis and for improving the company’s business. The integration of European e-invoicing functions and, for example, credit risk management, facilitates this approach.
Peppol and the European e-invoice should therefore not only be understood as fulfilments for their own sake. It is essential to have a broad vision and to understand that these are springboards for an increasingly digital and interconnected future.