How does Peppol e-invoicing work?

This post was originally written and published for Information and Data Manager

E-invoicing is not a new concept. Electronic invoices have been around for a while, in several different formats, standards, and names. All claiming to connect buyers and suppliers digitally and more efficiently.

The issue was that many e-invoicing systems were expensive and time consuming to set up. This meant that it was only something large businesses, who typically had a big volume of orders or invoices to process, considered implementing. The lack of a consistent and single format and framework for e-invoicing also kept it from being widely adopted by many smaller businesses.

The turning point for e-invoicing has been the adoption of a globally recognised standard for sending e-invoices and e-orders, known as Peppol (Pan-European Public Procurement Online). The Peppol standard enables anyone who is part of its global network to send e-invoices and e-orders easily and safely to each other.

The standard also enables a simple and accessible way for businesses to be onboarded onto the network, which has driven adoption across the world.

There are already 200,000+ businesses across 34 (and counting) markets on the Peppol network. Recently Australia, New Zealand, and Singapore have all adopted the standard as the basis for their latest national and regional e-invoice mandates.

How does Peppol e-invoicing work?

The below diagram shows how Peppol e-invoices are sent and received:

how can we help you?

Contact us today, our team will be happy to assist you.

would you like to know more?

  • Step 1. The supplier generates an invoice in their accounts receivable system and sends it electronically to their Certified Peppol Access Point.
  • Step 2. The sender’s Peppol Access Point validates the invoice to make sure that it can be sent via the Peppol network. They check if the supplier is legitimate and that the receiver can receive the invoice. The sender’s Access Point finds the buyer’s Access Point and sends it over electronically.
  • Step 3. The buyer’s Access Point receives the validated invoice and processes it directly into the buyer’s accounts payable system. This is typically done via an integration between the buyer’s system and the Access Point provider.
  • Step 4. The supplier’s invoice is automatically entered into the buyer’s system. There is no need for either party to do any manual data entry or checks. The whole process takes a matter of minutes. It is highly secure and very easy to use.

How much does Peppol e-invoicing cost and what should you look for in an Access Point?

As adoption of Peppol e-invoicing continues to grow in Australia and APAC, more and more businesses are starting to investigate how they can get started. One of the first questions that comes up in many of the conversations I’m having is how much Peppol e-invoicing costs?

There is not a simple answer, but the ATO recently approximated the cost of processing an invoice in three ways, comparing the cost of processing a paper, PDF and e-invoice. The differences are clear:

  • Paper invoices – approximately $A30 per invoice
  • PDF Invoices – approximately $A27 per invoice
  • E-invoice – less than $A10 per invoice

Multiplying these figures by the number of invoices you send and receive on a daily, weekly, or monthly basis (i.e. your invoice volume over a given period) gives you an idea of the total cost for each type of system and the savings you could be making by adopting Peppol e-invoicing.

However, as there are several different Certified Peppol Access Point providers across Australia and New Zealand, the costs involved with each provider varies. But there are usually two main costs to consider, and businesses should make sure their providers’ pricing structure reflects its ability to scale, as the number of transactions, e-invoices, or e-orders they send or receive grows over time:

  • An implementation fee – this covers the initial setup of your Access point and integration into your finance systems. That could cover an integration from your accounts payable platform into your access point, an integration from your accounts receivable platform into your access point, or both.
  • Monthly subscription fee – Once your finance systems are connected to your access point there is usually a monthly Peppol subscription fee. This covers the costs involved in sending and receiving business documents (e.g., e-invoices, e-orders) via the Peppol Network.

Remember to make sure that any subscription or monthly fee is volume-based, so that you are only paying for what you use. With greater discounts available for greater volumes, the average cost per business document sent or received should go down as your volumes increase.

would you like to know more?

Trusted by leading businesses across the region

We are source to pay automation experts with over 30 years of experience across the team and have been trusted partners of a number of leading organisations to deliver accounts payable automation and source pay solutions across APAC.

why our customers choose us

Our Focus on Business Value

Value is ultimately a common vision of what success looks like. It’s visibility. It’s savings. It’s user adoption. It’s compliance. It’s best practice. It’s all of that combined. It’s what we define, together, as our shared objective. Value is what we measure, what we strive for.

Partnership Approach

To help drive value, we work with you in an open and transparent way, we position ourselves alongside you every step of the way actively sharing both the risk and benefits with you – ensuring that we succeed together. That’s what we call partnership.

Source to Pay Expertise

Our team has over 30 year’s experience across successful Source to Pay transformations across the globe and have worked with some of the leading companies in a number of industries. We provide invaluable insights on how to ensure you are successful.