The European Draft Directive on e-invoicing – What About PEPPOL?

This June, the European Commission published a draft directive on e-invoicing in public procurement. The draft directive proposes the establishment of a European e-invoicing standard and the accompanying communication sets out actions that should be taken to achieve end-to-end e-procurement.

It calls for implementation by 2016 so that in all public procurement, e-invoicing is made mandatory and that there is a common standard for e-invoices so that suppliers in different member states can submit invoices across borders.

While this is generally seen as another step toward promoting e-invoicing in Europe, Mikkel Hippe Brun, co-founder of Tradeshift was recently interviewed on this subject and raised some concerns about the directive.

The main concern he raised in the interview was that the new directive does not point to PEPPOL as the way forward.

What is PEPPOL?

PEPPOL was designed to facilitate cross border transactions through a standard format for e-invoicing. Initiated in 2008, the PEPPOL project (Pan-European Public Procurement Online)  has been developing and implementing the technology standards to align business processes for electronic procurement across all governments within Europe, aiming to expand market connectivity and interoperability between eProcurement communities.

PEPPOL has been used to develop an e-invoicing standard in countries including Austria, Denmark, Finland, Norway, and Portugal, amongst others. The PEPPOL standards enable suppliers connected to a service provider on one state to submit invoices to a buyer or public sector institution in another state that may be using a different e-invoicing provider.

Hippe Brun said “It’s a model that has been implemented in several countries, it works in real life and has shown its merits"

Concerns about the directive

Hippe Brun said “It concerns me that draft legislation does not point to PEPPOL and say ‘this is the direction we are choosing’. It talks for the need for standardization in this space and it points in the direction to some standards which could build the foundation for that."

"But it takes years to mature standards, and it takes years to years for these standards to be implemented in standard business software, it takes years to get all the bugs out of the software that implements it and get scale on this. It concerns me that we are not getting the momentum now leading up to 2016, but we have to go through yet another cycle of standardization of academic talk of which standard is the best standard, how should it be implemented, who should govern it... questions like that which we just know is going to slow down this process significantly.”

The difference between Europe and Latin America

In Latin America, we have seen the governments of countries including Brazil, Mexico, Argentina and Chile mandating the use of e-invoicing, and clearly stating how it should be implemented.

Hippe Brun said “(Latin American countries) have overtaken what we have done in Europe. Denmark used to be at the forefront of invoicing in Europe and in the World, but not anymore. We are not going to be competitive in such an environment when we have to wait another  three years for this to be implemented.”

What do you think?

Hippe Brun said "Our input would be instead of calling out for another standard initiative, make a choice put your bet on something that the European Commission has already sponsored and already works in real life where existing business models can co-exist."

So what do you think? We know most of you want to see common e-invoicing standards. But we are not sure why the European Commission Draft Directive doesn’t mention PEPPOL. We would love to know what you think. Please leave a message in the comment, or email sarah@sharedserviceslink.com.