Peppol - Connect Once, Reach All - The UK's eInvoicing Mandate and You

At Purchase to Pay Network we’ve been highlighting the Peppol story and the potential benefits of a fully interoperable invoice transmission network for well over a decade. In fact, our first piece was shared to the Network back in 2013, only a year after OpenPeppol was founded. The message seemed simple, comprehensive and exciting; connect once, reach allAt Purchase to Pay Network we’ve been highlighting the Peppol story and the potential benefits of a fully interoperable invoice transmission network for well over a decade. In fact, our first piece was shared to the Network back in 2013, only a year after OpenPeppol was founded. The message seemed simple, comprehensive and exciting; connect once, reach all.

What’s taken so long?

So why has it taken so long for the UK to really hear that message? Ask the average finance or procurement professional what their understanding of Peppol is and you’re quite likely to find them scratching their heads. Perhaps it’s because once the lid’s lifted it can seem complicated. Perhaps it’s because it’s not a technology platform or restricted to one country it’s difficult to understand who “owns” it. Maybe it’s because it’s free.*

Peppol Reaches Critical Mass

But that’s what makes it so compelling. Make something pertinent, easy to use, efficient, compliant and safe and it will take off. But of course, these things take time to develop and trust. But like a telephone network, once a critical mass is reached, the story is more a case of well why wouldn’t you, rather than the opposite. And the thing is, a bit like a telephone network, you don’t really need to lift the lid to understand it, you just need to work with people who do. And today over 4 million organisations are registered in the Peppol network across 100 countries.

So, let’s start from the beginning.

What is Peppol and who Governs It?

OpenPeppol is an international not-for-profit association that manages and develops the Peppol specifications and infrastructure. Its governance is member-driven through authorities, committees and work groups. It was started in Europe with a public sector procurement focus it is now rapidly expanding internationally and into the B2B market.

Are we starting from scratch in the UK?

No, Peppol is already used in the NHS. Officially, Peppol has been mandated across NHS England since 2014 to automate supply chain documents, like purchase orders, despatch advices, and invoices between NHS trusts, the NHS Supply Chain, and vendors. In reality, the mandate has been more broadly adopted since the Public Procurement Act of 2019. Instead of suppliers having to use a multitude of hospital portals, suppliers connect once via Certified Peppol Access Points.

What is a Certified Access Point?

Your solution provider is. Or should be. And soon, must be. Once certified by Peppol and connected to the network, any supplier can connect to any buyer. Your provider, must amongst other things, commit to supporting Peppol BIS (Business Interoperability Specifications), such as Peppol 3.0.
Ok, So What’s Peppol BIS and Peppol 3.0?

Ultimately they relate to same thing and is often referred to as Peppol BIS Billing 3.0. This is the specific standardised requirements your invoice will need to contain to exchange machine-readable, structured invoices. It’s built upon EN (European norm) 16931. You’ll often hear this referred to as the semantic layer. This simply means that it defines the “what” that must be included on the invoice, such as buyer’s VAT number for example. The Syntax defines how it must be coded so that machines can read it, such as UBL (Universal Business Language). A further enhanced Peppol 4.0 is currently being developed.

Why is Interoperability Important?

Think of it as a handshake between two parties who have never previously met. Being able to connect seamlessly removes friction and speeds up the cash management cycle. For example, an eInvoice is generally created within the chosen IT solution of the seller. This is very likely to be a different solution to the buyer meaning that the process could be inefficient unless the invoice complies with a standardised data model that both parties can read. Peppol BIS uses UBL by default, which is an open ISO standard. In the past (and to be clear many still operate this model) buyers and suppliers either connected their eInvoices via a two corner or three corner model. However, these involved providers having to create data models individually for each client. And this is where Peppol comes in and has led the way with its Four Corner Model.

What is a Four Corner Model?

Think of the sender at one corner, their Access Point (solution provider) at corner two, the receiver’s Access Point at corner three and corner four being the receiver themselves, where the invoice is received in a compliant, machine-readable fashion. Operating a four corner model takes away the need for the two parties to use the same platform.

So, What is a Five Corner Model?

The fifth “corner” is the tax authority. This model exists where eInvoicing is being used specifically as a method to reduce VAT fraud and errors and speed up tax collection. The Peppol 5-Corner Model, sometimes known as the Continuous Transaction Control Model (CTC) builds on the existing 4 corner model and allows for reporting of tax data to the government in near real time.

How do Suppliers and Buyers Find Each Other on the Peppol Network?

Peppol contains a registry known as the Service Metadata Locator (SML) which is operated by the European Commission, and a decentralised network of participant addresses and capabilities known as the Service Metadata Publishers (SMP) which is operated by the Service Providers. You can also manually search for suppliers and buyers using the Peppol Directory.

Will the UK Mandate Create any Special Peppol Requirements?

Recently Peppol has created in partnership with GENA (a Service Provider’s group) an ‘Enhanced B2B Domain’ known as SP2SP which is designed to meet the needs of service providers exchanging structured invoices with each other containing more data and operational options for customers than the current version of the Peppol network. This capability could be evaluated for use in the UK.

What About ViDA?

In addition to the Business Interoperability Specifications (BIS) which provide standards for the invoice format, recently a PINT (Peppol International Invoice) methodology has been developed which could be evaluated in a Peppol UK PINT. In addition, if the UK decides to seek a link to the EU ViDA initiative which includes a cross-border eInvoicing and eReporting capability, then such features will be required.

What to Expect in the April 2029 Mandate

As from the end of June this year, we know that Peppol will form the CIN (Core Interoperability Network) in the upcoming mandate, and we can expect a decentralised four-corner model. A fifth corner is not anticipated at this stage, but the mandate is being created with this being a potential feature in the future. The mandate relates to all B2B and B2G VAT registered companies where they will have to be able to send and receive all invoices electronically. More information will be shared in this autumn’s Budget.

The Future

eInvoicing is not just compliance, and important though it is, it’s not just about closing the tax gap either. It’s a revolution in the way we do business. Faster cash flows, reduced error and fraud, reduction in late payments, better intelligence from cleaner data and accelerated growth prospects. And this is just the beginning. As digitisation pathways mature, other elements of international trade come into view such as transport documents, Government and customs documents and other commercial trade documentation. The potential is vast and those businesses which understand that and place themselves in a position to maximise the potential will put themselves at great competitive advantage.

Useful Acronyms to Remember:

CIN – Core Interoperability Network
CTC – Continuous Transaction Controls
UBL – Universal Business Language
SML – Service Metadata Locator (directory)
BIS – Business Interoperability Specifications
EN – European Norm
SP2SP – Service Provider to Service Provider
PINT – Peppol International Invoice
ViDA – VAT in the Digital Age

*Peppol is an open network and is free to join. Businesses do not pay Peppol directly, instead, they pay certified service providers to connect their billing software to the network.

Further reading published by #UKeLab and PPN: Discussion Paper: Considerations for the UK eInvoicing Mandate  https://www.p2pnetwork.org/white-papers/4344-discussion-paper-considerations-for-the-uk-einvoicing-mandate-roadmap.html