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How does PEPPOL work?

Updated: Jul 1

PEPPOL is a set of standards and a network for e-invoicing


Peppol is an interoperability framework, which allows for the seamless global exchange of structured business documents such as electronic invoices. In other words, Peppol is a set of technical specifications that facilitates easy data exchange across disparate government systems and their suppliers. Peppol is not an e-procurement platform; it is rather the methodology and technical requirement to send these documents in compliance with local regulations.


Key Components of the Peppol Network


Peppol Access Points (APs): These are certified service providers that act as gateways, connecting businesses to the Peppol network. APs are responsible for transforming the sender’s document into a standardized Peppol BIS (Business Interoperability Specifications) format that the recipient can understand.


Peppol Service Metadata Publisher (SMP): This is a database that contains technical information about each Peppol participant, including the AP they use and the document formats they support.


Peppol Service Metadata Locator (SML): This is a central directory that lists all Peppol participants and points to their respective SMPs.


The Peppol 4-Corner Model

Peppol 4 corner model

The Peppol network operates based on a 4-corner model involving the sender, the recipient, the sender’s access point, and the recipient’s access point.

  1. Corner 1 (C1): Sender — The business or entity that initiates the electronic document. The sender works with their access point to create a new message.

  2. Corner 2 (C2): Sender’s Peppol Access Point (AP) — The sender’s software communicates with a service provider, which is the gateway to the Peppol network.

  3. Corner 3 (C3): Receiver’s Peppol Access Point (AP) — On the receiving end, another service provider takes the document from the Peppol network and delivers it to the intended recipient.

  4. Corner 4 (C4): Receiver — The business or entity that receives the electronic document.


This model offers greater flexibility than traditional VAN e-invoicing services, as it does not require specific service providers, registered Peppol IDs, or costly setups. All that is needed is the partner’s Peppol ID to exchange information.


How the Peppol Works

  1. The sender creates an electronic document, such as an invoice, using their own business system.

  2. The sender’s AP validates the document data, transforms it into the Peppol BIS format, and transmits it securely to the recipient’s AP using the Peppol e-Delivery protocol.

  3. The recipient’s AP receives the standardized document, validates it, and converts it into a format compatible with the recipient’s system.

  4. The recipient can then automatically process the document without the need for manual data entry.

How PEPPOL Works
How Businesses Can Connect to the PEPPOL Network

What is the relationship between PEPPOL and e-invoicing?


PEPPOL and e-invoicing are closely related as PEPPOL provides the standardized infrastructure and framework that facilitates the efficient exchange of electronic invoices across borders. Here’s the relationship between PEPPOL and e-invoicing:


  • Standardization and Interoperability

PEPPOL establishes standardized Business Interoperability Specifications (BIS) for e-invoices, ensuring that electronic invoices can be exchanged seamlessly between different systems and organizations, regardless of their location. This standardization is crucial for interoperability, allowing businesses and public entities to communicate effectively.


  • Secure and Efficient Document Exchange

PEPPOL offers a secure network for transmitting e-invoices. It uses the four-corner model to ensure that electronic documents, such as invoices, are sent and received securely between the sender and recipient through their respective access points. This ensures that sensitive financial data is protected during transmission.


  • Compliance with Regulations

PEPPOL supports compliance with various EU directives and national regulations related to e-invoicing. For instance, the EU Directive 2014/55/EU mandates the use of e-invoicing in public procurement. By using PEPPOL, businesses, and public entities can ensure they meet these regulatory requirements.


  • Simplifying Cross-Border Transactions

E-invoicing through PEPPOL simplifies cross-border trade by eliminating the complexities associated with different national e-invoicing standards. PEPPOL’s unified approach allows businesses to engage in cross-border transactions without worrying about varying invoice formats and standards.


  • Cost Efficiency and Process Improvement

By adopting PEPPOL for e-invoicing, organizations can reduce costs associated with paper-based invoicing and manual processing. The automation and efficiency gained through PEPPOL’s electronic document exchange streamline the invoicing process, leading to faster payments and improved cash flow management.


Peppol’s Global Adoption

While Peppol originated in Europe, its adoption has expanded globally, with participants from countries such as Canada, New Zealand, Singapore, and the United States. The network continues to grow, making it a promising candidate for becoming a global standard for electronic document exchange.


 

In conclusion, the Peppol network provides a decentralized and standardized framework for businesses to exchange electronic documents securely and efficiently across borders. By leveraging the network’s components and adhering to its specifications, organizations can streamline their procurement processes and adapt to the increasing global adoption of e-invoicing and e-procurement.



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