Peppol eInvoicing Will Change How You Think About Processing Invoices in Your Business
- Posted by: David Watters
- Category: Best Practices, Peppol
The requirement for automation in business operations has led to a significant shift in how companies think about their invoice management process. Accounts Payable’s teams are not immune to this shift, they are constantly busy undertaking work that is manual in nature. Despite your best efforts as an organisation your suppliers send invoices in all sorts of different formats and entry points, driving consistency that can enable automation has been challenging at best and too hard at worst. The introduction of Peppol eInvoicing to Australia and New Zealand creates a very unique opportunity to drive invoice automation for every type of business, particular those who:
- Are tired of receiving invoices in all different formats, from paper and trying to decipher handwriting to PDF invoices and having to rely on OCR data capture
- Want a more secure way to receive invoices and avoid any possible invoice fraud or scams
- Want to automate their invoice processes but who don’t want a huge bill each time they connect with a supplier.
In this article we take a bit of a deeper look at Peppol eInvoicing, how it will change the way you and others businesses will think about invoicing in the future and how you can prepare your business for eInvoicing.
What is Peppol eInvoicing?
Traditionally eInvoicing was a term used to describe the process of receiving an invoice via email as a PDF, whilst this cut out a lot of manual costs in sending physical documents it didn’t drive a huge amount of automation, invoice data was manually entered by the supplier into the PDF, the buyer would then get the invoice and manually (or via an OCR system with variable levels of accuracy) enter that data into their accounting system. In an era of endless possibilities with technology this is painfully redundant. The challenge has always been creating a common and shared way for businesses to share invoicing data, thats where the Pan-European Public Procurement Online (PEPPOL) framework comes in. Originally developed in the European Union in partnership with industry experts, it allows businesses to send and receive electronic invoices in a secure environment by providing a common format and Government supported framework.
Australia and New Zealand join over 30 other countries who have adopted Peppol as their eInvoicing standard.
Why should you care about Peppol eInvoicing?
Peppol eInvoicing is the next evolution of eInvoicing and will naturally become the standard for Business invoicing across the region. There are already a number of Peppol eInvoicing mandates across State and Federal Governments and a consultation paper out for what a business mandate may look like in the future, so the wind is certainly behind the sails of Peppol in the region. More importantly are the security, process and cost reduction opportunities that Peppol eInvoicing provides. In comparison to other invoicing formats, like emailed PDFs, point to point EDI integrations and physical documents, Peppol eInvoicing overcomes a number of the challenges such as:
- The end-to-end process of invoice creation, sending, receipt and data entry for both buyer and supplier is automated -> no more manual, time consuming processes
- Invoices cannot go missing, be intercepted and hacked or sent to the wrong email address. All invoices are sent securely point to point between the customer and buyer almost eliminating invoice fraud and data entry issues.
- By connecting once to the network you are automatically able to send and receive documents to ANYONE else in the network without any additional investment. One of the biggest drawbacks of customised EDI integrations between buyers and suppliers is that you have to spend a lot of money to connect with just one supplier – an investment that can’t be spread across any other suppliers. True, scalable connectivity with all your suppliers is not cost-prohibitive.
What types of businesses will benefit most from Peppol eInvoicing?
The benefits of Peppol eInvoicing apply equally to small businesses and large corporates alike every business has to create and send invoices at one end and process and pay those invoices at the other end. The universal benefits across every business have already been discussed including things like:
- Lower costs in processing an invoice
- Invoice fraud protection
- Removal of manual data entry
In addition to these we have seen that businesses of different sizes typically enjoy slightly different benefits, a few specific examples include:
Large multi-site/entity businesses
The efficiency gains that can be achieved from reducing manual processing errors where different entities are being billed and handled by the same team are huge. No longer will the business, nor accounts payable teams have to make sure that the right entity is being billed for their service or that the right details are on the invoice. The entities are all setup on the Peppol network and the supplier sends the invoice based on ABN of the entity they are charging – this automatically completes all other required entity information and ensures that it gets to the right place. The AP Team can then have confidence that the invoice is addressed to the right entity.
Suppliers to Federal and (some) State Government Agencies
One carrot that is being utilised to encourage Peppol eInvoicing adoption is accelerated payment terms for suppliers of Federal and some State Government agencies. With a commitment to pay Peppol eInvoices within 5 days, this can be hugely beneficial from a cash flow perspective and ensures you’ve got money in the bank.
Businesses with diverse, long-tail supplier bases
Businesses that have diverse supplier bases where they are getting few invoices from a large number of suppliers have benefited from Peppol eInvoicing, providing a standardised and simple format for those businesses to submit their invoices that then do not require any manual data entry or intervention. Popular small and medium sized business accountancy platforms like Xero and Quickbooks are already Peppol enabled and include it as part of their subscription – enabling their users to send Peppol eInvoices with a click of a button. Historically trying to find an automated way to get their invoices would have involved PDF invoices or supplier portals that require more effort from the supplier. This creates a true win-win for both supplier and customer.
Four tips to help you start preparing for Peppol eInvoicing
Peppol eInvoicing will continue to gain popularity and notoriety across the region over the coming months and years, at some point your business will be asked to be able to send or receive Peppol eInvoices, so what can you do in preparation for this?
- Start speaking with your existing key suppliers and customers about Peppol – to try and avoid an awkward situation where you are asked by a key customer to send an eInvoice and have little time to implement, start the conversation now with them to get their view on Peppol eInvoicing, they may already be connected to the network and ready to go. This will give you an indication of readiness across your suppliers and customers which should help guide the urgency or need for Peppol adoption across your business.
- Look at the technology options available to you, and choose wisely – if you are not already Peppol enabled you’ll want to get an idea of what is out there in the market from a technology perspective. To be able to send or receive a Peppol eInvoice you need to be working with an accredited Access Point provider (see: What should I be looking for in a Peppol Access Point?). Also be aware that there is a bit of false information out in the market around Peppol eInvoicing, have a look at our article with IDM where we bust the top 5 myths around Peppol in Australia.
- Workshop with your accounts payable team – avoid looking at Peppol in isolation, use the opportunity to discuss with your AP team how Peppol eInvoicing will fit into your overall AP process, what needs to change, what opportunities this creates and what suppliers it would benefit the most. Armed with this you will be better positioned to select not only the right access point solution but also be ready to onboard suppliers and get the most from your investment.
- Identify time consuming and ‘painful’ invoices – every AP Team will relate to a supplier whose invoice is always wrong, processed incorrectly or causes them a lot of hassle and phone calls. These are the key pain point suppliers you want to target to onboard onto Peppol eInvoicing. Automating the 10-20% of invoices that you spend 80% of your time on can drive some real efficiencies across your AP team and enable them to focus on more value adding activities.
Automation has proven to be an effective method of saving time, reducing costs, and improving efficiency across every process and industry. Given the opportunity that Peppol enables to automate the process of sending and receiving invoices, it’s a surprise that businesses are still on the fence as to when to make the move. While it can seem to be a bit complex to implement, the benefits of Peppol eInvoicing make it a very valuable invoicing solution for businesses of all sizes. eInvoicing not only aids in better process automation for your accounts payable team but also gives them more time to focus on other areas in your organisation.
If you need some help deciding whether Peppol is right for you, feel free to contact us today!