Are you also looking for a unified way to comply with country-specific E-Invoicing requirements around the world, such as the B2G E-Invoicing requirements in Germany (exchange of XRechnung e-invoices), Belgium, the Netherlands, Norway, Austria, Singapore, …? Are you using SAP ECC or SAP S/4HANA? Then you might have heard of the terms “PEPPOL” and “SAP Document and Reporting Compliance”.
But what is PEPPOL and what is SAP Document Compliance? How are both technologies connected to ensure digital compliance? How does PEPPOL work and for which countries does it work? In this blog post, I will answer these questions and provide you with more information on how you can connect SAP Document Compliance with PEPPOL to ensure compliance with different country-specific legal requirements around the world.
Why PEPPOL is used to exchange electronic documents all over the world
PEPPOL, at first an acronym for Pan-European Public Procurement On-Line, started in 2008 as a test project of the European Commission. The original goal of the project was to enable businesses to communicate electronically with any European public sector entities in the procurement process. Since then, the PEPPOL platform has been widely adopted by European governments and companies and it has evolved far beyond the original intention. Also countries outside of Europe (Australia, Singapore, New Zealand) have adopted PEPPOL, and therefore, the name PEPPOL was de-acronymised and rebranded for global adoption in October 2019. The overall objective today is to enable a secure and simple exchange of electronic documents (e.g. E-Invoicing, E-Orders) between public and private entities worldwide, by providing a set of technical specifications across purchase-to-pay business processes. But PEPPOL is not another eProcurement system. This European electronic data exchange network was designed to facilitate secure electronic transactions between buyers, sellers, and government agencies.
In this context, PEPPOL is based on three components:
- The network (PEPPOL E-Delivery Network) which provides market enablement for interoperable E-Procurement solutions
- The document specifications (PEPPOL Business Interoperability Specifications ‘BIS’) based on the UBL (Universal Business Language) XML
- The legal framework that defines the network governance (PEPPOL Transport Infrastructure Agreements, “TIA”)
With these components, PEPPOL provides a simplification and improvement of the onboarding process for buyers and suppliers who want to exchange electronic documents.
What is SAP Document Compliance?
SAP Document Compliance, also known as the SAP eDocument Solution, is a strategic, end-to-end solution for both SAP ECC and SAP S/4HANA to create the e-invoices in the required country-specific XML format (many countries are covered), based on the SAP SD or SAP FI billing documents in your SAP system. With its built-in SAP eDocument Cockpit, SAP Document Compliance provides a very user-friendly SAP-integrated environment to manage and monitor all different exchanged e-invoices per country. Whereas SAP Document Compliance is used to generate the required XML e-invoices, PEPPOL is used to transfer them in an automated way to the e-invoice recipient.
Within the SAP eDocument Framework, an SAP eDocument is created for each e-invoice that needs to be exchanged. This is then automatically mapped into the required XML format before it is transmitted to the invoice recipient. Since SAP is a certified PEPPOL provider, SAP has its own certified PEPPOL Access Point for both sending and receiving XML e-invoices. Once submitted, the XML invoice is sent to the SAP Document Compliance, cloud edition PEPPOL Access Point, where it is processed and sent to the receiver’s PEPPOL Access Point. At that point in time, a response flows immediately back into the SAP eDocument Cockpit, where the document is updated to the latest status.
At the moment of writing, SAP Document Compliance provides a PEPPOL-integrated solution for Germany (XRechnung), Belgium, the Netherlands, Sweden, Norway and Denmark. Currently, also other country-specific solutions (such as Austria, etc.) are being developed for later release. Please let me know in the Comments section below if you want to know if a specific country is on the SAP Document Compliance PEPPOL roadmap. Please read our blog post “XRechnung: B2G E-Invoicing in Germany with SAP Document Compliance” if you want to learn more on the XRechnung process requirements and how they can be technically implemented with SAP Document Compliance.
Apart from the PEPPOL-integrated solutions, SAP Document Compliance also provides solutions for countries that don’t require e-invoices to be exchanged through PEPPOL, such as SDI in Italy, the e-regulations in Turkey, SII in Spain, CFDI and Complemento de Pago in Mexico, RTIR in Hungary, etc. For those countries, SAP Document Compliance can be connected with other data transmission platforms, such as SAP PI, SAP CPI, IBM Sterling B2B Integrator or other 3rd party middleware systems (e.g. Edicom, INPOSIA, etc.) to ensure compliance with the country-specific e-invoicing requirements.
In my blog post, SAP Document Compliance to meet legal requirements worldwide, you can learn how SAP Document Compliance works from a technical and process-related point of view. Please leave a message in the Comments section below to ask me your questions about this.
How e-invoices are exchanged through PEPPOL – The Four Corner Model
The PEPPOL E-Delivery network uses a ‘Four Corner Model’ based on Access Points to process and exchange XML e-invoices that are created within the SAP eDocument Cockpit. The four-corner model can be compared to the model used for mobile telephones where each mobile phone has its own network supplier and the providers must work together to connect their clients.
In the case of PEPPOL, these Certified Access Points are mandated to support the PEPPOL Bis Billing 3.0 norm with the Core Invoice Usage Specification (CIUS). This standard is based on EN16931, which is a result of the European Directive 2014/55/EU for electronic invoicing in public procurement.
In the graphic above, the following flow is illustrated for the exchange of e-invoices through PEPPOL:
- An XML e-invoice (created from an SAP eDocument) is sent from your SAP ERP system to your connected PEPPOL Access Point (e.g. the SAP PEPPOL Access Point or any other PEPPOL-certified Access Point).
- Your (sender’s) PEPPOL Access Point uses the PEPPOL infrastructure to gather the required information of the receiver and its PEPPOL Access Point.
- The e-invoice is sent to the PEPPOL Access Point of the receiver.
- The receivers PEPPOL Access Point transmits the e-invoice to the ERP system of the receiver.
What are the benefits of PEPPOL?
There are some major benefits of this PEPPOL Four Corner Model:
- You are free to choose any Access Point in any country
- Sign one agreement, connect to all available Access Points
- No roaming fees between PEPPOL Access Points
- No partner-specific message guidelines and mappings needed
- Business partners can easily change providers
- Providers can easily manage certificate changes
- PEPPOL provides security
- A PEPPOL-integrated SAP-solution ensures compliance with the country-specific legal requirements that require data transmission through PEPPOL (such as Germany, Norway, Belgium, the Netherlands, etc.)
How about the PEPPOL security for exchanging e-invoices?
Since e-invoices contain important, confidential information, it is crucial that they are exchanged in a safe and secure way. To ensure this, the PEPPOL Four Corner Model provides a high security standard. Each participant needs to register at the PEPPOL network to receive a PEPPOL ID. With this unique ID, the identity of connected parties is established. The PEPPOL Access Points also encrypt all communication, using a Public Key Infrastructure (PKI).
Moreover, the PEPPOL infrastructure provides two services to gather and share information between Access Points:
- PEPPOL Service Metadata Provider (SMP) acts as an address book or business registry containing details of participants withing a specific E-Procurement community. The SMP is typically provided to complement an Access Point, because they publish the customer’s details of the Access Point.
- PEPPOL Service Metadata Locator (SML) is a centralised service to define which SMP needs to be used for finding out delivery details of any PEPPOL participant. It is a core service that identifies all PEPPOL trusted Access Points and SMPs.
Which countries use PEPPOL for exchanging B2G e-invoices?
At the moment of writing, PEPPOL is officially in use in 28 countries in Europe plus Australia, Canada, New Zealand, Singapore, and USA with PEPPOL Authorities placed in 13 countries.
Please find below a list of the key countries that adopted PEPPOL, and their PEPPOL authorities (if applicable):
- Australia, Australian Taxation Office (ATO)
- Austria
- Belgium, Beleid en Ondersteunning – Stratégie Appui (BOSA)
- Denmark, Danish Business Authority (ERST)
- England, Department of Health and Social Care (NHS)
- France
- Germany, Koordinierungsstelle für IT-Standards (KoSIT)
- Ireland, Office of Government Procurement
- Italy, Agency for Digital Italy (AGID)
- The Netherlands, SimplerInvoicing
- New Zealand, Ministry of Business Innovation and Employment (MBIE)
- Norway, Agency for Public Management and eGovernment (Difi)
- Poland, Ministry of Economic Development (MR)
- Sweden, Agency for Digital Government (DIGG)
- Singapore, Info-communications Media Development Authority (IMDA)
Please leave a question in the Comments section below if you need more information on the PEPPOL profile for a specific country. I am happy to help you.
Why choose PIKON as your partner in your Compliance Project?
At PIKON, we have established a Competence Center for Legal Requirements, where our team of expert consultants stay on top of the latest developments regarding SAP Document Compliance and PEPPOL. We combine our SAP expertise and in-depth knowledge of the legal requirements with experience gained over many projects, to help you with your strategic roadmap to digital transformation and compliance with country-specific legal requirements. If you have any questions, or if you would like to discuss how PIKON can help you with your business case, do not hesitate to leave a comment below or to request a web-meeting. I am happy to help you and I will come back to you as soon as possible.