Digital Transformation,  Electronic Invoicing

The Peppol 4-corner model and the 5-corner Peppol CTC

peppol

Peppol (Pan-European Public Procurement Online) is a standardized framework that streamlines the process of exchanging electronic documents through Peppol Access Points. Peppol is known as the interoperable billing model that can operate as a 4-corner model or a 5-corner model. 

Let's delve into these models and understand how they facilitate seamless communication between businesses.

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What is Peppol?

In today's digital age, efficient and secure exchange of electronic documents is essential for businesses worldwide. Peppol originated as a network and a set of specifications designed to simplify public procurement between companies and administrations in Europe, ensuring total interoperability within a European scope. Its main objective is to facilitate transactions between suppliers and public entities throughout Europe. OpenPeppol is the international nonprofit organization responsible for the development and maintenance of Peppol specifications.

Today, Peppol has transcended European borders and has become a system adopted by countries worldwide.

Its scope goes beyond interaction between companies and governmental entities, establishing itself as a widely adopted cross-industry communication network in B2B and B2G environments. This network enables global interoperability, facilitating transaction integration between counterparts worldwide.

Countries like Singapore, Japan, Australia, and New Zealand are already using this network to exchange their electronic invoices. Moreover, countries like the United States are drawing inspiration from this system to replicate it and promote the use of electronic invoicing among businesses.

Peppol Objectives

  • To address the interoperability issue in electronic public procurement and to promote transparency. Market fragmentation forces multinational companies to adopt different electronic solutions for each country. This increases spending, reduces technological adoption rates, and complicates data exchange between partners.
  • To automate business processes, both with the public and private sectors. OpenPeppol argues that technological initiatives to automate processes should be approached from a broad perspective.
  • To help companies, especially SMEs, to become more competitive globally. The adoption of Peppol facilitates technological development and internationalization of SMEs, which may now find it challenging to adapt to all existing regulations.

The Peppol Standard

The message standard adopted by the Peppol network is called Peppol-UBL (Universal Business Language) and is based on XML taxonomy. Currently, the Peppol BIS 3.0 standard is used. Peppol Business Interoperability Specification (Peppol BIS) is a basic specification for invoice usage (CIUS) based on CEN/EN 16931:2017.

However, given Peppol's evolution towards other countries and regions, there is a need to create an international standard to comply with fiscal requirements different from those of European Union countries.

The Peppol PINT Standard: Peppol International Invoice

PINT aims to facilitate global invoice exchange using the Peppol network, without the need for extensions for each country's specific requirements.

The introduction of PINT marks a significant milestone in the global adoption of Peppol and is expected to bring significant benefits to the Association and its members.

The final version of PINT was approved by the PoAC CMB on June 15, 2023, and can be officially used from July 1, 2023. The BIS billing specifications of PINT can be found here. Based on these specifications, each country may consider its local variations to include local business and country-specific needs..

Peppol Infrastructure

Peppol Access Points are gateways between the actors in an electronic document flow. They ensure compliance with Peppol standards and security protocols.

Peppol's infrastructure comprises:

  • Peppol Access Points (APs): Access points must be certified by OpenPeppol and are responsible for applying Peppol protocols and standards for sending and receiving electronic documents. Specific protocols and defined standards are used to shape electronic documents. Any transaction issued from an AP must be received by another AP, so communication through this infrastructure can only be established via Access Points.
  • Service Metadata Publisher (SMP): It is a decentralized registry that provides information about access points and the types of messages a Peppol recipient can receive. These services contain the available addresses and metadata of the users connected to the Peppol network. It is the central registry of the European Union that defines in which SMP the information of each participant in the electronic data exchange is located. Each partner has a unique Peppol  ID in the form of a URL to be found in the SML. Through this identifier, an Access Point locates the correct SMP and, through it, the other destination Access Point.
  • Service Metadata Locator (SML): Central registry that defines the SMP that contains the information of each partner in an electronic data exchange. Each partner has a unique identifier in the form of a URL through which the Access Points locate the SMP and the access point to the transaction recipient.

Peppol 4-Corner Model

The 4-corner model is the basis of Peppol's electronic document exchange framework. It involves four key entities: the sender, the recipient, and their respective two access points. The sender and recipient can be located anywhere in the world and must be registered in the Peppol network.

  1. The sender initiates the document exchange by creating and sending an electronic document to their Peppol access point.
  2. .The sender's Peppol access point connects with the recipient's Peppol access point and sends the electronic document to it.
  3. The recipient's Peppol access point forwards the electronic document to the recipient's internal system.

5-Corner Model: Peppol CTC

The 5-corner model expands the 4-corner model by adding a central fiscal platform to the infrastructure. The governmental platform acts as the fifth corner. This model is also known as Peppol CTC and includes real-time information transmission to tax authorities.

Peppol's CTC model is a hybrid model that combines elements of existing CTC models with Peppol's infrastructure to provide a reliable and secure solution that is global and interoperable. Compared to other CTC models, Peppol's CTC model can be described as a decentralized CTC model with regulated document exchange.

It allows tax authorities to optimize tax management by accessing invoice data in real or near real-time, achieving precise correspondence between tax revenues and business activity.

While, in the 4-corner model, the document exchange flow ends with the sending to the Access Points, in the 5-corner model, a flow is added where the Access Points also send the documents to the central fiscal platform.

At this point, two situations can arise:

  1. The governmental platform can validate the documents by assigning a unique identifier to each invoice, prior to sending the invoice to the recipient.
  2. The governmental platform can choose to delegate the validation of documents to certified service providers and only act as a repository for invoices.

EDICOM Peppol Access Point

In 2015, the OpenPeppol association certified EDICOM as a Peppol Access Point. Additionally, EDICOM received SMP certification for the implementation of its metadata publication service. In this way, the service offered by EDICOM to operate on the network is a comprehensive service that guarantees effective and complete operation from the beginning to the end of the process.

The EDICOM Peppol Access Point allows European administrations and public authorities to interact with their community of partner and suppliers through integrated solutions that automate the exchange of all types of electronic documents under the Peppol-XML standard.

By having a global electronic invoicing platform, it guarantees interconnection and interoperability in a global context, making possible the exchange of electronic invoices adapted to the laws of each country.

EDICOM's solution for operating with Peppol is recognized internationally and supporting clients worldwide.

EDICOM is an accredited  Peppol Access Point in Europe, Singapore, Japan, Malaysia, Australia, and New Zealand.

Why choose EDICOM as an Access Point?

EDICOM was one of the first Access Points certified by Peppol, and its accreditations guarantee the interoperability and reliability of the platform.

All of EDICOM's processes are carried out on its proprietary infrastructure, hosted in SaaS mode, allowing companies to operate on it, reducing costs and concerns.

EDICOM has the required certifications in place regarding information security, guaranteeing data integrity and security.

EDICOM's platform operates automatically, increasing productivity and reducing economic costs.

With EDICOM, it is possible to centralize all electronic communications, even if the company operates in various countries.

With EDICOM's solution, companies have the peace of mind of adapting adequately to established legislation and processes, avoiding errors and compliance risks.

Advantages of the Peppol Network

Adopting common standards implies huge cost savings for private companies and public organizations. With the use of Peppol, it is no longer necessary to have different solutions to adapt to partners' technological specifications.

Additionally, through the Peppol network, it is possible to communicate and exchange documents with any company or public organization in a completely secure manner.

Another great advantage of this system is that it allows process automation, reducing the workload of network users. As a result, commercial and administrative procedures are simplified and expedited.

Finally, Peppol increases the competitiveness of companies in a global market. Countries that use the network can exchange documents and information with partners from any country, also using the network.

Want to know more about how to operate with Peppol?

Contact our experts to learn more about working with the Peppol network.

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