Welcome to the digitalized 4.0 world of business transactions, where e-invoicing compliance has become a cornerstone for efficient financial operations.
Yet, a staggering statistic from Thomson Reuters whitepaper reveals that global organizations grapple with complex e-invoicing and continuous transaction control (CTC) regulations, with many lagging in technological infrastructure to keep pace.
And where does this lead to? Increased reconciliation times—not surprising, considering finance teams across the globe need to spend extra days matching data across various compliance documents.
Then how is it connected to PEPPOL?
What is PEPPOL and Why It’s Important?
Mind you, there were originally different national standards for e-invoices like Svefaktura (Sweden), EHF (Norway), or NemHandel (Denmark) - but they could not be applied worldwide.
That is how PEPPOL (Pan-European Public Procurement On-Line) was born. As an Odoo EDI (Electronic Data Interchange), it also serves as a protocol for securely exchanging business-critical electronic documents, including invoices.
Originally an EU brainchild, PEPPOL’s unifying format reach has now unfurled globally, embraced by nations like Canada, New Zealand, Singapore, and the United States.
But what’s the benefit of using Odoo specifically?
As we delve deeper into Odoo’s integration with PEPPOL, we’ll explore how the connection promotes compliance, security, operational excellence in e-invoicing, and more.
Peppol Registration
If you are convinced that PEPPOL suits you, your next step is to register to join the PEPPOL Network before diving into the Odoo-side-of-things. It’s pretty simple:
- Access Point Provider Selection: Businesses must choose an Access Point Provider like Odoo. Odoo can facilitate the creation of a PEPPOL ID—a unique identifier for sending and receiving e-invoices.
- Verification and Information: Your company needs to provide relevant business information to the chosen Access Point Provider. The provider verifies this information and assigns the PEPPOL ID.
- Testing and Connection: After obtaining the PEPPOL ID, you can set up your PEPPOL access point connection. Testing ensures a smooth transition, and once connected, businesses can start exchanging documents. Ask your Odoo partner for help establishing the proper connection.
As of date, you can register with PEPPOL for free, even in the Community version.
Benefits of Odoo as a Peppol Network Access Point
We know Odoo is pretty nifty for invoicing and your general accounting flow. However, Odoo offers several benefits compared to other PEPPOL gateways:
01. Seamless Integration: Odoo as Your PEPPOL Access Point
Common Issue: Many third-party access points introduce additional layers, causing delays and potential complications in invoice transmission. The additional layers could include:
- Value-Added Networks (VANs): Some gateways route invoices through VANs, which act as intermediaries. VANs may add processing time, increase costs, and introduce potential points of failure.
- Custom Middleware: Third-party gateways might use custom middleware or APIs to connect to PEPPOL. These additional components can lead to complexity and slower transmission.
- Multiple Hubs or Aggregators: In some cases, invoices pass through multiple hubs or aggregators before reaching PEPPOL. In this case, each hub introduces latency and potential issues.
Odoo’s Solution: Odoo is an Access Point (AP) and Service Metadata Publisher (SMP) for PEPPOL, which means users can send and receive e-invoices without needing to manually format files or use third-party services. This integration simplifies the process and ensures seamless communication within the network.
It integrates seamlessly with Odoo’s own Accounting app. This way, you can format, generate, and export files such as customer invoices and credit notes that comply with PEPPOL – all directly from Odoo.
02. Streamlined Invoicing: The Automation Advantage
Common Issue: Most gateways lack robust integration, requiring manual checks and adjustments before transmitting invoices.
Odoo’s Solution: Its automation engine orchestrates the entire invoicing process. It automatically populates relevant fields (such as sender and recipient details) and validates invoices against PEPPOL requirements. Ensure adherence to the PEPPOL BIS Billing 3.0 format with Odoo and transform invoice data into PEPPOL-compliant XML2.
03. Cost Reduction: Odoo Invoicing Efficiency Unleashed
Common Issue: Other gateways involve manual processes, leading to higher labor costs and potential errors.
Odoo’s Solution: By automating tasks such as invoice creation, validation, and delivery—organizations reduce labor costs. Moreover, fewer manual interventions mean fewer opportunities for errors, avoiding costly rectifications. With Odoo handling repetitive tasks, your finance teams can focus on strategic activities instead of data entries.
You can also save valuable time in invoicing processes. Invoices move seamlessly from initiation to transmission, from reminders and approvals to notifications. It goes wiithout saying that automated processes accelerate invoice processing. If your customers receive invoices promptly, you’ll get paid faster. Cash flow improves, benefiting the organization’s financial health.
The best news is that Odoo allows free activation of the PEPPOL format in version 17. Other gateways may charge for similar functionality, making Odoo a budget-friendly choice.
04. Enhanced Traceability and Fewer Errors: Real-Time Insights
Common Issue: Discrepancies in submitted invoices can lead to disputes and compliance issues. If you are not using the PEPPOL official gateway like Odoo, it is not impossible to experience payment delays, non-compliance penalties, operational inefficiencies, audit trail challenges, and data security risks.
Odoo’s Solution: During invoice creation, Odoo activates validation rules. These rules check for discrepancies, missing information, or incorrect tax codes. For example, if mandatory fields are incomplete or tax rates don’t align with PEPPOL standards, Odoo flags these issues early in the process. It could also validate the structure, format, and content of the invoice, which guarantees adherence to the PEPPOL BIS (Business Interoperability Specifications) requirements.
Additional perk: the ERP also supports various PEPPOL formats, including UBL 2.1, e-fff (Belgium), Factur-x/XRechnung (France/Germany), NLCIUS 2.1 (Netherlands), and EHF (Norway), making it a versatile option for businesses operating globally.
05. Better Compliance and Security: Fortified Data Exchange
Common Issue: Most gateways lack strict adherence to the PEPPOL EDI format and lack local-specific consideration, affecting cross-border transactions. Poorly executed cross-border transactions commonly lead to financial losses, legal risks, operational delays, reputation damage, and data security breaches.
Odoo’s Solution: Your data will be encrypted during transmission using AS2 to replace expensive value-added networks previously used for data interchange.
AS2 encodes files as “attachments” within a standardized S/MIME message (an AS2 message). The actual file contents are typically in a separately agreed-upon format, such as XML or EDIFACT. In Odoo, you can sign and/or encrypt your message.
If requested, an MDN (Message Disposition Notification) is sent back to the original sender upon successfully receiving and processing the AS2 message.
To comply with local laws in different countries, Odoo offers localized features for specific regions, such as Australia. These features include standardized taxation formats, new stock valuation configurations, and exchange difference accounts.
4 Key Features of Odoo’s Peppol Integration for E-Invoicing Compliance
Now that we know about the benefits. No problem; we have four main features that will pique your interest.
01. E-Invoices Generation
Odoo generates an invoice in the Universal Business Language (UBL) format. Then, it will augment it with PEPPOL-specific extensions and include additional fields, such as the PEPPOL participant identifier (PEPPOL ID) and document type. To ensure that it adheres to PEPPOL’s syntax and structure, the invoice will be transformed into a PEPPOL-compliant XML document.
02. Contact Verification
Ensuring accurate recipient details for seamless communication, Odoo plays the role of a meticulous verifier.
First, the Odoo ERP system consults the PEPPOL Participant Registry to validate recipient information – It verifies the recipient’s PEPPOL ID, ensuring it corresponds to the correct organization. Then, it identifies the recipient’s PEPPOL access point (AP) to ensure that the e-invoice reaches the intended recipient’s AP for further processing.
03. Send Invoices
As a reliable courier, the ERP system enables the direct transmission of e-invoices via the PEPPOL network. Here is how it works:
Odoo establishes an AS2 (Applicability Statement 2) connection with the recipient’s PEPPOL AP. The PEPPOL-compliant XML invoice will then be sent to the recipient’s AP and travels through the PEPPOL network to reach the recipient’s system, and upon successful delivery, you will receive an acknowledgment (e.g., a PEPPOL Receipt).
04. Receive Vendor Bills
The all-in-one business suite also handles incoming invoices from vendors via PEPPOL.
When a vendor sends an e-invoice via PEPPOL, Odoo’s Access Point (AP) receives it through an AS2 connection. The incoming PEPPOL XML invoice will be analyzed to extract relevant information and then validate the invoice against PEPPOL standards.
Thanks to Odoo automation features, further processes will be triggered, such as updating accounts payable and inventory records.
Peppol Use-Case in National Electronic Invoicing
Still need convincing that PEPPOL could solve your invoicing problems beyond the EU?
01. The Origin of PEPPOL Use-Case in Europe
As a group of countries working closely together, its primary goal is to reduce obstacles arising from different legal requirements and lack of interoperability in cross-border exchanges.
European Standard (EN 16931-1:2017) defines the semantic model of an electronic invoice. It ensures semantic interoperability and legal certainty. Syntaxes compliant with this standard include UBL (Universal Business Language) and UN/CEFACT XML Cross Industry Invoice messages.
And that's how PEPPOL fulfills EU directives and national legislation for e-invoicing.
02. Regulatory Requirements in Singapore: PEPPOL and InvoiceNow
Singapore's Infocomm Media Development Authority (IMDA) became the first non-European National Authority to join OpenPeppol in 2018, demonstrating its commitment to digital transformation.
Not stopping there, Singapore launched a nationwide PEPPOL-based e-invoicing network in January 2019. The network aims to improve efficiency, reduce costs, accelerate payments, and promote sustainability. Simultaneously, it tackles manual processing and administrative overhead.
Since early 2020, the Singapore Government has added e-invoicing via the Nationwide E-Invoicing Network, making it the preferred channel for suppliers submitting invoices to the government.
By adopting PEPPOL, ASEAN countries can harmonize e-invoicing practices across borders. This consistency simplifies cross-border trade, reduces friction, and enhances economic integration—all part of the Digital Economy Framework Agreement.
So yes, although PEPPOL is widely available in Odoo 17, for earlier Odoo versions, we still consider PEPPOL integration as an Odoo localization perk.
Embracing the Future of E-Invoicing with PEPPOL
The trajectory of PEPPOL is heading in a global direction.
This is unsurprising since it ensures regulatory compliance across borders, aligning with EU directives and national legislations for seamless cross-border transactions. A handful of other countries are following suit and adopting the e-invoice standard as their own.
Its impact has been proven by Singapore's InvoiceNow initiative, which accelerates payments and reduces administrative burdens. Singapore's pioneering role as the first non-European PEPPOL Authority provides cost savings, environmental benefits, and streamlined processes – a triple threat driving widespread adoption.
With governments such as Singapore endorsing PEPPOL as the preferred channel for suppliers, the time to act is now.
Ensure you don’t get left behind – try to catch up with Singapore and connect your Odoo with the cutting-edge, globalized Odoo EDI.
Contact Portcities, your trusted guide through this transformative journey, and embrace the future of digital invoicing.