PEPPOL changes the way the NHS does business

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Peppol  NHS suppliers network

Now the PEPPOL network for e-invoicing is in place, which method is best for your organisation?   

This Spring the NHS opened its doors to and started trading via the new PEPPOL (Pan European Public Procurement On-line) network. For the first-time, health service providers and their suppliers will be sending and receiving orders and e-invoices across the PEPPOL network. 

The NHS sets out on its Scan4Safety website there are currently six demonstrator NHS trusts (including Derby, North Tees and Hartlepool, Leeds, Royal Cornwall, Plymouth and Salisbury), who are sending and receiving orders and e-invoices across the PEPPOL network. Ultimately, all suppliers to the NHS will be required to send electronic invoices through a PEPPOL compliant Access Point.

PEPPOL was conceived as a means of creating a cross border messaging standard to enable suppliers to trade with public sector organisations across Europe. In the UK, PEPPOL is a central pillar of the Government’s eProcurement strategy for the NHS. The aim of PEPPOL is to increase the use of eProcurement within the NHS and to make trading with the NHS easier for business of all sizes.

Ultimately, PEPPOL aims to save money within public sector back offices, which can be used for front line services. PEPPOL enables documents such as purchase orders and invoices to be exchanged in a standard way electronically between buyers and sellers, without any manual intervention.

Exciting times indeed. I believe that PEPPOL has the potential to revolutionise European e-invoicing and do for electronic trading what interoperability agreements between mobile operators have done since the 1990s.

How does PEPPOL work in the UK?

In the new world, an NHS buyer will be able to connect to the PEPPOL network via an ‘Access Point’. Electronic invoices, orders and other purchase related documents will be sent, and can be received, via the buyer’s Access Point to the supplier via the supplier’s own Access Point.

This ‘four cornered model’ will allow an NHS buyer to trade with any supplier connected to PEPPOL.  Similarly, a supplier will be able to trade with all NHS buyers (and other public and private sector organisations) on PEPPOL.

There is no doubt in my mind that, PEPPOL will change the way the NHS does business. If you are an NHS buyer, PEPPOL will mean those business processes are faster and more efficient as paper becomes a thing of the past. For suppliers trading with the NHS, selected Access Points will enable your business to be PEPPOL-ready with minimum changes to your IT systems or processes.

On-boarding is simple, taking a matter of minutes rather than days or weeks, and trading relations are improved as you can be paid more efficiently and with no need to keep chasing on invoices that keep getting lost along the way.

Now PEPPOL is here, what methods of e-invoicing are available and which is best?

E-invoicing has been around in various guises for over 40 years, yet there is still confusion and misunderstanding about the different types of e-invoicing. Let’s take a look at the options available and why some approaches are having more success than others at on-boarding suppliers.

XML or EDI invoicing : the traditional e-invoicing approach was for a supplier to send XML or EDI files.  Conceptually it is simple: the billing system of the supplier sends (often via a service provider) an XML or EDI invoice document to the finance application of their buyer.  But for suppliers it is less simple. In the majority of cases, the supplier needs to change their billing application and infrastructure in order to send XML or EDI documents.  If the supplier is sending 1,000 invoices a year to the buyer, they may be able to justify the effort and cost to do this (assuming they also have the skills available that is).  But if they are only sending 100 invoices a year, it is far less likely they will be willing to make the changes to support this method of invoicing. As a result, on-boarding rates remain low and paper invoicing remains. 

Invoice Portals : portals were supposed to remove the barriers to e-invoicing which exist with XML and EDI. And they do, but only for a minority of suppliers.  The problem for all except the very smallest, micro business, is that to use an invoice portal creates duplication and operational inefficiencies.  If an organisation already raises their invoice in an accounting application, why would they want to do it all over again in a 3rd party portal?  Duplicate time, duplicate effort and duplicate cost. They also add risk that the invoice details recorded in the supplier’s finance application are different to that in the portal.  So, portals may help the very smallest of suppliers who don’t use an accounting package, but for everyone else it makes no business sense. As a result, on-boarding rates remain low and paper invoicing remains. 

PDF e-invoicing : it is common knowledge (backed up by reports from the likes of Accounts Receivable Network) that PDF invoicing is the second most popular way to invoice after paper. It simply requires the supplier to create their invoice as normal within their own accounting package and send as a PDF file via email instead of printing and sending as a paper document via snail mail. Almost every billing application can generate an invoice as a PDF – what many people aren’t aware of is that when a PDF is generated by a billing application, in almost every instance it will be a text PDF with all the invoice data items embedded in the document and visible to the right technology (CloudTrade technology as it happens). This type of e-invoicing is accessible to all – large and small companies alike. Suppliers are not required to change their processes, or incur any technology or infrastructure changes or costs – as a result on-boarding rates are extremely high.

For an e-invoicing solution to be a success in your business it needs to achieve high supplier adoption rates, and to do this it needs to be simple to use and non-disruptive to your suppliers:

  • Don’t ask suppliers to change their applications or infrastructure to send XML or EDI
  • Don’t ask suppliers to raise their invoice in their own accounting package and then do it again in a 3rd party portal

By adopting these principles, you can be confident of driving supplier adoption rates in your PEPPOL and e-invoicing programmes.

Read the article published in Government Computing on 25 May 2017.


Find out more about PDF e-invoicing by downloading our guide: 

Download our Free PDF E-Invoicing Guide


Find out more about CloudTrade's PEPPOL Services for NHS suppliers.