Thought Leadership
What is the Difference between Peppol and EDI?
May 23, 2022
What’s the difference between Peppol and EDI as a way to exchange invoice and order data? Isn’t EDI pretty much the same as Peppol? It’s a question we get a lot, so our team of Peppol eInvoicing experts pulled together a detailed breakdown of the differences between invoices sent via EDI and Peppol eInvoices considering a wide range of areas including:
- How is the invoice data captured when it is received?
- How accurate is the data captured off the invoice?
- How structured is the data that is being captured?
- How eco-friendly is it?
- What is the risk of falling victim to invoice fraud?
- How many companies can use this method?
- How complex is this to implement and run?
- What are the costs like to set this up?
- What are the costs like to maintain this option?
- What is the risk of losing invoices?
- What is the risk of paying invoices late through this option?
- How much does each invoice cost you to process?
what is EDI
EDI (or Electronic Data Interchange) is where businesses develop system to system integrations with suitably sized buyers and customers to send and receive invoice and order data directly. This is also referred as 2 corner model where the supplier and buyer are integrated on a one to one relationship. The system to system integration is standardised between the two organisations but will likely need changes to work with and for other organisations.
Large businesses developed system to system connections in Australia, New Zealand and globally however it has not been an affordable option for small and medium sized businesses. Meanwhile, large businesses have struggled to scale past a small selection of suppliers.
A typical EDI invoice process flow is outlined below:
What is the difference between Peppol and EDI?
Data Entry
Automated
Data is integrated directly from the suppliers systems to the buyers.
VS
Automated
Data is integrated directly from the suppliers systems to the buyers
Accuracy
High
Direct exchange of structured data from system to system.
VS
High
Direct exchange of structured data from system to system.
Data Structure
Structured
A variety of formats are in use e.g. XML.
VS
Structured
Standard BIS 3.0 format
Sustainability
Good
Direct transfer of invoice data is far more sustainable than paper and post invoicing.
VS
Great
Direct transfer of invoice data is far more sustainable than paper and post invoicing.
Risk of Fraud
Low
Point to point integrations minimise the risk of fraudulent transactions
VS
Low
Peppol security standards ensure the buyer and sender are legitimate.
Reach
Limited
Only available to those trading partners that you have created an integration with
VS
High
Buyers and suppliers can trade openly with anyone in the network.
Complexity
High
Differing formats and systems create a high level of complexity in the process.
VS
Medium
Peppol network is completely standardised making it easy to work with once setup.
Setup Costs
High
Requires IT and integration expertise and is custom built for each supplier/buyer relationship.
VS
Low
The initial setup costs can be scaled across all the suppliers within the Peppol network.
Maintenance Costs
High
Custom built point to point integrations are required to be maintained
VS
Medium
Universal standards ensure maintenance is straightforward. You connect once, you connect to all suppliers in the network.
Risk of Losing Invoices
Low
Data is transferred directly into the buyers system so the risk is very low
VS
Low
Data is transferred directly into the buyers system so the risk is very low
Risk of Late Payments
Low
Due to the automated processes involved, processing times for EDI invoices are faster, reducing the risk of late payments.
VS
Low
Due to the automated processes involved, processing times for Peppol invoices are faster, reducing the risk of late payments.
Processing Cost per Invoice
~$15 AUD
VS
~$9 AUD
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