The Pros and Cons of Peppol and its Impact on the Collection Process

Starting January 1, 2026, Belgium will require companies to send electronic invoices through the Peppol network (Pan-European Public Procurement Online). This European standard for electronic invoicing offers numerous benefits for businesses, but it also raises some questions.

Peppol is revolutionizing invoicing, but does it also reshape how unpaid invoices are tracked both internally and externally? In this article, we will discuss what Peppol is, its advantages and disadvantages, and the potential changes it may bring to the debt collection industry.

What is Peppol?

Peppol (est. 2008) is a European initiative that allows for standardized and secure electronic document exchange, such as invoices, between businesses and governments. The system is designed to simplify administration, reduce errors, and speed up document processing.

Peppol uses uniform formats, so companies no longer need to rely on different systems and standards. The mandatory use of Peppol starting in 2026 is a step toward a fully digitized invoicing process in Europe.

Initially, Peppol focused on improving public procurement, making it easier for companies to participate in cross-border tenders in other EU member states. This aligns with the broader EU strategy to promote the Digital Single Market and lower trade barriers.

Peppol is now used globally (Australia, New Zealand, Singapore, the U.S., and the list continues to grow).

How Does Peppol Work?

Peppol is designed to facilitate cross-border digital trade and is based on a set of standards and infrastructure that enable interoperability between different software and countries. Here’s an overview of how Peppol works:

Peppol Network

The Peppol network consists of various participants, including governments, businesses, and service providers (Access Points). These Access Points connect users to the Peppol network and ensure secure transmission of messages (such as e-invoices) between parties.

Peppol Access Points

Certified service providers facilitate connections between senders and receivers within the Peppol network. Each participant must register with an Access Point to send or receive messages. Access Points ensure that data is transmitted according to Peppol standards.

Standards

Peppol uses standardized formats for e-invoices and other documents. The most common standard is the Universal Business Language (UBL), ensuring that all participating systems use the same structure and terminology for documents like invoices, purchase orders, and shipping notices.

Party Identification

Each participant in the Peppol network receives a unique identifier, usually a company number like a VAT number, which helps in addressing documents correctly within the network.

The Advantages of Peppol

The introduction of Peppol brings several potential benefits:

Fraud Prevention

Companies can only send or receive invoices after registering in the network, significantly reducing fraudulent invoices. The exchange takes place via advanced security protocols, making document interception nearly impossible.

Standardization

Peppol provides a standardized framework for electronic documents, so businesses and governments use the same protocols and formats. This prevents compatibility issues between different systems.

Interoperability

Peppol allows organizations with different IT systems and software solutions to exchange electronic documents seamlessly, which is crucial for international trade and cooperation.

Efficiency and Automation

Invoices are processed faster and more accurately. Peppol reduces errors from manual document processing. The uniform Peppol structure also minimizes the chances of mistakes in sending and receiving invoices, leading to fewer payment disputes.

• • The faster an invoice is sent, the quicker it can be paid!
  • Debtors often argue that invoices were sent to the wrong email address, but this excuse will no longer apply with Peppol.

Cost Savings

Electronic document exchange via Peppol eliminates the need for paper documents and manual processes, leading to lower transaction costs and long-term savings.

Promoting Cross-border Trade

One of Peppol’s original goals was to facilitate cross-border trade and procurement within Europe, but it now also supports global trade by providing common standards and infrastructure.

Increased Transparency

Peppol offers a clear invoicing system, providing more transparency in communications between businesses and governments.

Simplified Burden of Proof

The use of electronic documents makes it easier to prove late payments or disputes.

• • Another argument frequently used by debtors to avoid paying costs and interest (based on their own terms or the Belgian law on late payments in commercial transactions) is that the invoice was not received. With Peppol, this argument will soon no longer apply.

The Disadvantages of Peppol

Despite Peppol’s significant advantages, there are also some challenges:

Implementation Costs

While Peppol may lead to cost savings in the long run, companies must consider initial setup costs. Smaller businesses, in particular, may face expenses for new software and staff training.

Integration Complexity

Companies with outdated systems may face technical challenges in integrating Peppol.

Security and Privacy Concerns

When exchanging sensitive data, companies must pay extra attention to data security.

Adjustment Periods

During the transition, companies may experience a learning curve and adjustment issues. This could cause temporary disruptions in the invoicing process, especially when technical issues arise or if there is confusion about the new requirements.

Evolving Regulations

The regulations and requirements surrounding electronic invoicing may evolve, requiring further adjustments and costs for companies already using Peppol.

Reminders

Peppol is currently focused on sending and receiving electronic invoices and related documents, such as purchase and delivery documents. Reminders or notices for overdue payments are not yet included in the Peppol standards. Therefore, a company’s pre-collection process (reminder process) must still be managed outside of Peppol.

Impact of Peppol on the Internal and External Collection Process

The question arises as to whether the introduction of Peppol will significantly change the debt collection industry. While Peppol offers more efficiency, the number of delinquent payers is unlikely to decrease drastically. Forgetfulness will be eliminated, as will the argument that the invoice was not received or correctly sent. However, non-payment often stems from deeper financial problems, disputes, or negligence—issues that a new invoicing system will not solve.

Human intervention throughout the pre-collection process within the company itself, as well as by the external collection partner, remains crucial.

Reflections from Collection Partner TCM Belgium:

On-site Visits

TCM Belgium has noticed a change in attitudes toward unpaid invoices. Twenty years ago, people were ashamed of unpaid bills; now, emails or letters often go unopened. That is why, 15 years ago, TCM Belgium became a pioneer in visiting debtors on-site. Debtors are confronted with their debts in a humane but direct manner by a team of legal experts. Often, this on-site visit is the amicable action that generates a payment. TCM Belgium can offer these visits locally in over 100 countries through its affiliation with the international collection network TCM Group.

Opportunity for Further IT Integrations

TCM Belgium sees the mandatory use of Peppol as an opportunity to implement further system integrations. When Peppol needs to be implemented, it may be useful for your IT team to explore broader integration possibilities for tracking unpaid invoices. Numerous API connections have already been established between TCM Belgium’s systems, clients, and accounting platforms.

International Collections in > 100 Countries

Peppol is now used by many countries worldwide. However, there are still countries that do not implement this system. Local follow-up remains extremely important. TCM Belgium, through the TCM Group, guarantees proper and ethical collection of unpaid invoices worldwide.

Do you have questions about collecting unpaid invoices or would like more information about our API connections? Don’t hesitate to contact us at s.dereze@tcm.be or call 0498 29 29 14.

13/09/2024

The Pros and Cons of Peppol and its Impact on the Collection Process

Starting January 1, 2026, Belgium will require companies to send electronic invoices through the Peppol network (Pan-European Public Procurement Online). This European standard for electronic invoicing offers numerous benefits for businesses, but it also raises some questions.

Peppol is revolutionizing invoicing, but does it also reshape how unpaid invoices are tracked both internally and externally? In this article, we will discuss what Peppol is, its advantages and disadvantages, and the potential changes it may bring to the debt collection industry.

What is Peppol?

Peppol (est. 2008) is a European initiative that allows for standardized and secure electronic document exchange, such as invoices, between businesses and governments. The system is designed to simplify administration, reduce errors, and speed up document processing.

Peppol uses uniform formats, so companies no longer need to rely on different systems and standards. The mandatory use of Peppol starting in 2026 is a step toward a fully digitized invoicing process in Europe.

Initially, Peppol focused on improving public procurement, making it easier for companies to participate in cross-border tenders in other EU member states. This aligns with the broader EU strategy to promote the Digital Single Market and lower trade barriers.

Peppol is now used globally (Australia, New Zealand, Singapore, the U.S., and the list continues to grow).

How Does Peppol Work?

Peppol is designed to facilitate cross-border digital trade and is based on a set of standards and infrastructure that enable interoperability between different software and countries. Here’s an overview of how Peppol works:

Peppol Network

The Peppol network consists of various participants, including governments, businesses, and service providers (Access Points). These Access Points connect users to the Peppol network and ensure secure transmission of messages (such as e-invoices) between parties.

Peppol Access Points

Certified service providers facilitate connections between senders and receivers within the Peppol network. Each participant must register with an Access Point to send or receive messages. Access Points ensure that data is transmitted according to Peppol standards.

Standards

Peppol uses standardized formats for e-invoices and other documents. The most common standard is the Universal Business Language (UBL), ensuring that all participating systems use the same structure and terminology for documents like invoices, purchase orders, and shipping notices.

Party Identification

Each participant in the Peppol network receives a unique identifier, usually a company number like a VAT number, which helps in addressing documents correctly within the network.

The Advantages of Peppol

The introduction of Peppol brings several potential benefits:

Fraud Prevention

Companies can only send or receive invoices after registering in the network, significantly reducing fraudulent invoices. The exchange takes place via advanced security protocols, making document interception nearly impossible.

Standardization

Peppol provides a standardized framework for electronic documents, so businesses and governments use the same protocols and formats. This prevents compatibility issues between different systems.

Interoperability

Peppol allows organizations with different IT systems and software solutions to exchange electronic documents seamlessly, which is crucial for international trade and cooperation.

Efficiency and Automation

Invoices are processed faster and more accurately. Peppol reduces errors from manual document processing. The uniform Peppol structure also minimizes the chances of mistakes in sending and receiving invoices, leading to fewer payment disputes.

• • The faster an invoice is sent, the quicker it can be paid!
  • Debtors often argue that invoices were sent to the wrong email address, but this excuse will no longer apply with Peppol.

Cost Savings

Electronic document exchange via Peppol eliminates the need for paper documents and manual processes, leading to lower transaction costs and long-term savings.

Promoting Cross-border Trade

One of Peppol’s original goals was to facilitate cross-border trade and procurement within Europe, but it now also supports global trade by providing common standards and infrastructure.

Increased Transparency

Peppol offers a clear invoicing system, providing more transparency in communications between businesses and governments.

Simplified Burden of Proof

The use of electronic documents makes it easier to prove late payments or disputes.

• • Another argument frequently used by debtors to avoid paying costs and interest (based on their own terms or the Belgian law on late payments in commercial transactions) is that the invoice was not received. With Peppol, this argument will soon no longer apply.

The Disadvantages of Peppol

Despite Peppol’s significant advantages, there are also some challenges:

Implementation Costs

While Peppol may lead to cost savings in the long run, companies must consider initial setup costs. Smaller businesses, in particular, may face expenses for new software and staff training.

Integration Complexity

Companies with outdated systems may face technical challenges in integrating Peppol.

Security and Privacy Concerns

When exchanging sensitive data, companies must pay extra attention to data security.

Adjustment Periods

During the transition, companies may experience a learning curve and adjustment issues. This could cause temporary disruptions in the invoicing process, especially when technical issues arise or if there is confusion about the new requirements.

Evolving Regulations

The regulations and requirements surrounding electronic invoicing may evolve, requiring further adjustments and costs for companies already using Peppol.

Reminders

Peppol is currently focused on sending and receiving electronic invoices and related documents, such as purchase and delivery documents. Reminders or notices for overdue payments are not yet included in the Peppol standards. Therefore, a company’s pre-collection process (reminder process) must still be managed outside of Peppol.

Impact of Peppol on the Internal and External Collection Process

The question arises as to whether the introduction of Peppol will significantly change the debt collection industry. While Peppol offers more efficiency, the number of delinquent payers is unlikely to decrease drastically. Forgetfulness will be eliminated, as will the argument that the invoice was not received or correctly sent. However, non-payment often stems from deeper financial problems, disputes, or negligence—issues that a new invoicing system will not solve.

Human intervention throughout the pre-collection process within the company itself, as well as by the external collection partner, remains crucial.

Reflections from Collection Partner TCM Belgium:

On-site Visits

TCM Belgium has noticed a change in attitudes toward unpaid invoices. Twenty years ago, people were ashamed of unpaid bills; now, emails or letters often go unopened. That is why, 15 years ago, TCM Belgium became a pioneer in visiting debtors on-site. Debtors are confronted with their debts in a humane but direct manner by a team of legal experts. Often, this on-site visit is the amicable action that generates a payment. TCM Belgium can offer these visits locally in over 100 countries through its affiliation with the international collection network TCM Group.

Opportunity for Further IT Integrations

TCM Belgium sees the mandatory use of Peppol as an opportunity to implement further system integrations. When Peppol needs to be implemented, it may be useful for your IT team to explore broader integration possibilities for tracking unpaid invoices. Numerous API connections have already been established between TCM Belgium’s systems, clients, and accounting platforms.

International Collections in > 100 Countries

Peppol is now used by many countries worldwide. However, there are still countries that do not implement this system. Local follow-up remains extremely important. TCM Belgium, through the TCM Group, guarantees proper and ethical collection of unpaid invoices worldwide.

Do you have questions about collecting unpaid invoices or would like more information about our API connections? Don’t hesitate to contact us at s.dereze@tcm.be or call 0498 29 29 14.

13/09/2024