Since 2022, the global payments industry has been growing steadily by 11%, making international transactions a monthly activity for both public and private organizations. Due to the increase in global payments, the European Legislation has promulgated a directive introducing e-Invoicing for global procurement practices, leaving PDF invoices behind.
PDF invoices were the norm in the past. However, their unreliable nature was a burden to companies. The inability to manage currency exchanges or to process data efficiently has turned companies to e-invoicing. In order to streamline the process of managing online transactions for companies, the European Commission has provided funding to support the development of Peppol.
If you’re not yet familiar with Peppol, don’t fret, we have it all covered. In this blog, we will explain what Peppol is, how it works, and the benefits of switching to electronic invoicing. We will also show you a smart and efficient way of turning PDF invoices into e-invoices.
Let’s begin!
What is Peppol?
Peppol is an international network, which uses a standardized format for business documents in the form of electronic invoicing. It enables smooth trade between organizations worldwide, as they all adopt a universally-accepted digital format.
Peppol is used for the secure transfer and retrieval of electronic business documents, especially invoices. It facilitates international transactions and improves global procurement for public and private companies, helping them conduct business as B2B and B2G (business-to-government) organizations.
Founded in 2008, Peppol has now more than 42 countries under its wing, with a focus on Europe, Singapore, Australia, and New Zealand. In the past 3 years alone, this international network has helped businesses complete 130 million transactions through its Access Points.
An Access Point is a gateway to e-invoicing in the Peppol network. It can be set up by companies themselves, which requires registration with a local Peppol authority. If no local authority is available, organizations can opt for using OpenPeppol, a lengthy accreditation process that companies are required to complete in order to become compliant with the Peppol framework.
The Open Peppol accreditation involves Peppol membership fees, proof of technical competency, and continuous maintenance, development, and support cycles. In the long run, it is much easier and cheaper for companies to use Peppol through the certified Peppol Acces Point provider, instead of handling all tasks independently.
But how is the Peppol framework actually constructed? Let’s delve deeper into this topic and learn more about the most important characteristics of this e-invoicing network.
Peppol Framework
The Peppol framework consists of three different elements, including the Peppol eDelivery Network, Peppol Business Interoperability Specifications (BIS), and Peppol Transport Infrastructure Agreements (TIS). We will cover each of these components and their respective roles below.
Peppol eDelivery Network
The Peppol eDelivery Network uses a four-corner model. This means it connects different service providers through the Peppol Access Points. Regardless of which provider a company chooses to cooperate with, they are able to connect with them and use e-invoicing, as long as they are all registered as Peppol members.
This eDelivery network is also referred to as a true “connect-one-reach-all” network. Making e-invoicing the main payment practice, organizations are able to expand their horizons and reach multiple vendors and service providers. This way, they are increasing their global transactions and international connections.
Peppol Business Interoperability Specifications ‘BIS’
Business Interoperability Specifications (BIS) is a set of specifications that ensure the standardization of business documents sent through the Peppol network. BIS establishes the manner electronic documents are created, which then become universally accepted by companies as part of the Peppol framework. These documents include product catalogs, and order and dispatch confirmations, but the main focus is on invoices.
The BIS was developed for eProcurement processes in order to standardize the electronic procurement documentation that was being exchanged and validated within international transactions. The exchange process takes place between two parties, the buyers and the suppliers, across Europe and beyond.
Peppol Transport Infrastructure Agreements ‘TIA’
Peppol Transport Infrastructure Agreements, shortly TIA, is the legal framework that defines the governance of the Peppol network. It consists of members from both the public and private sectors and is responsible for the development, implementation, and maintenance of Peppol specifications.
The TIA facilitates trade for existing members, but also for companies that would like to adhere to the Peppol network. It sets precise rules that become generally applicable in global procurement. Complying with the Peppol Transport Infrastructure Agreements is also a prerequisite for gaining access to the Access Point accreditation.
Peppol is a complex network and, as we have just learned, it operates worldwide. If you’re not sure if Peppol operates in your country, keep reading, and let’s find out together!
Which Regions are Using Peppol for e-Invoicing?
Peppol is growing steadily, with more and more countries choosing to use this e-invoicing system in their global transactions. Denmark and other Nordic countries are at the forefront of e-invoicing adoption, as they have already mandated the use of Peppol for business-to-government (B2G) operations.
Western Europe has also created incentives to increase the uptake of Peppol use. As of now, the countries that are using Peppol are Spain, The Netherlands, Belgium, France, and the United Kingdom, but other countries are also looking into making Peppol a standardized practice in their global procurement operations.
In South America, e-invoicing is also a popular practice, as Chile, Brazil, Mexico, and Argentina register a high use of Peppol e-invoicing for the public and private sectors. Besides automating invoicing and improving business processes, e-invoicing helps counter the high rates of tax evasion.
Last but not least, Asia is a promising market for the use of Peppol e-invoicing. After Singapore became one of the early adopters of Peppol, other countries, including Japan, implemented the Peppol framework to enhance their paper-based administrative economy.
We can see that e-invoicing has become a mandatory practice in many countries and it is becoming a replacement for the traditional PDF invoicing system for many organizations. So how do companies manage to seamlessly move from PDF invoices to their electronic counterparts? Let’s see what the process of turning PDF invoices into e-invoices looks like.
How to Turn PDF Invoices into e-Invoices?
In order to see how the process of turning PDF invoices into electronic invoices works, we first need to understand the difference between the two.
PDF invoices are created, sent, and received electronically. Despite this fact, they cannot be processed electronically as the information contained in a PDF is presented in a human-readable instead of a machine-readable format.
The e-invoice is created from the very beginning in a specific structured format, usually based on an XML format. This allows computerized systems to read the file and process its content, enabling invoice data to be imported directly and seamlessly into relevant processing systems.
In order to make the transition as smooth as possible, organizations are turning existing PDF invoices into electronic ones with the help of Optical Character Recognition (OCR) software. The OCR software scans the PDF file and extracts, converts, and classifies all important data points into a business-ready format such as XML, and many others.
What are the Benefits of e-Invoicing?
So what makes electronic invoices so appealing that their usage has significantly increased amongst organizations? Let’s discuss the most important benefits of e-invoicing:
- It is cost-effective: Companies do not need to finance activities associated with manual invoice processing, such as purchasing raw materials, saving up to $40,000 per year.
- Higher efficiency: With digital invoices, transactions between organizations and suppliers work smoothly as they are adopted and accepted by both parties, leaving no room for misunderstanding.
- Less processing errors: E-invoicing makes it almost impossible for human errors to occur as automation can have an accuracy rate of up to 99% in data extraction and processing.
- Lower risk of fraud: E-invoices make it difficult for scammers to alter the document and change important details. As a result, it lowers the risk of invoice fraud or vendor fraud to occur.
- Facilitates global trade: Electronic invoicing offers businesses and vendors greater access to international markets. There is no need to further convert invoices based on local regulations or foreign currencies.
If you would also want to implement e-invoicing in your company but do not know where to start, we have just the solution. Klippa DocHorizon is a digital platform that can help your organization convert, extract, anonymize, classify, and verify documents, including PDF invoices.
Turn PDF Invoices into e-Invoices with Klippa
With Klippa DocHorizon, you can easily make the transition from PDF files to an XML format for Peppol, with the help of OCR technology. In just 4 easy steps, you can convert existing PDF files into electronic invoices:
Step 1: Upload or take pictures of PDF invoices
Upload the PDF invoice via email, website, or by simply taking a picture of it using your mobile device and uploading it to the software.
Step 2: Extract data
Klippa DocHorizon reads the PDF file and then extracts the data, using OCR technology.
Step 3: Parse the data
For a seamless transition to a machine-readable format, the software completes data parsing. The extracted information is now verified and converted into a structured data format, such as XML and many more.
Step 4: Send the e-invoice to an ERP system or database
After successfully converting the data, the software is ready to send the e-invoice to an existing system, such as an accounting or ERP system. This is possible by integrating our OCR API.
And that’s it! Simple, effective, and straightforward, Klippa DocHorizon can help your company improve business processes and embrace automation in its global procurement practices.
If you would like to know more about the product, book a free demo down below or contact one of our experts!