Peppol initiatives in the Nordics
Let’s take a look at how Peppol is influencing e-procurement and e-commerce in the Nordics (with a little highlight on Denmark). It will be interesting to see what conclusions we can draw for the rest of us.
Peppol initiatives in the Nordics
Nordic countries have always been considered forerunners in the e-commerce world (at least in Europe). And at the same time, there is very often drawn seen a connection between Peppol’s success and Norway. This is why I would like to take a look at how Peppol is influencing e-procurement and e-commerce in the Nordics (with a little highlight on Denmark). It will be interesting to see what conclusions we can draw for the rest of us.
I also want to include a special part on e-invoicing formats and standards for nerds like me and will take a closer look at what Peppol Bis 3.0 means for local standards such as Svefaktura.
Peppol developments in the Nordics
The other day I was talking to my dear colleague from Sweden, our very own Matts Ek and he told me about an event he recently attended. The event was with participants from the Swedish Companies Registration Office, The Swedish Association of Local Authorities and Regions, and the Agency for Digital Government. In addition, there were participants from other Nordic countries and different service providers. It was interesting to hear about the developments of e-invoicing in the Nordics but the Danish case is something I’d like to highlight here.
As you might know, with the EU Commission directive EC/2014/55 all public authorities in Europe have to be able to receive electronic invoices already since April 2019 in case e-invoices are delivered according to European Norm (downloadable via National standard organization sites). Some of the Nordic countries like Norway have mandated Peppol as an infrastructure to execute B2G e-invoicing. Sweden mandates Peppol for all the new connections but already existing ones can work as they do. Iceland, Denmark, and Finland – all of them are supporting Peppol in parallel with existing domestic systems just because the existing systems have been in use already for quite some time.
This is all nice and well, but the Nordic countries don’t want to stop here – there is an ambition to do more. The whole procurement process has to be effective. Even though the reality is that introducing e-procurement is not as easy as introducing e-invoicing. This isn’t only about changing the process from paper to electronic but this is also about changing the mindset of the users. This is why I am happy to see that Nordic countries are not afraid of challenges – Denmark for example wants to make catalogs, orders, and invoices compliant with Peppol BIS3 by January 2021. What is this Peppol BIS3? I will take a little deep dive into that further down in this post.
Those who remember the history of e-invoicing might also know that Denmark mandated B2G e-invoicing already in 2005. In the beginning, it was very much a mixture of scanning and e-invoicing but as of now 99% of Danish B2G invoices are electronic. Now Denmark is taking the next steps in their long-term adoption of e-procurement using the Peppol network as a platform (and as we know our direct Danish friends they will not go about sugarcoating this). Their ambition is not small – Denmark wants to create support for all public procurers and take Peppol into use in all of the e-procurement processes – catalog, ordering, fulfillment and billing. They are already in the process of creating a plan for the implementation of public procurement and are discussing with different service providers to see what the market can contribute. This year new legislation is up to be approved and take effect in January 2021 that fully supports this initiative.
Let’s look at Sweden. What about Swedish success stories? E-Invoicing has been in use for years already – Svefaktura as local standard invoice formats have been in use for a long time. The e-invoicing rate in the public sector is on average more than 55%. The readiness to receive an electronic invoice by public sector entities is close to 100%. As I wrote above a local infrastructure has been in place for a long time but now also Sweden has looked more towards Peppol. Since 2019 all the new invoicing that is set up for the public sector entities has to happen via Peppol. The local invoice standard, Svefaktura, will be deprecated from spring 2021.
With other e-procurement processes like ordering and fulfillment, the picture in Sweden is not quite the same as with e-invoicing. As the implementation of e-commerce is somehow considered to be more resource demanding than in 2018 68% of the municipalities stated that they have a shortage of resources to do that whereas 19% of the municipalities felt a shortage of skills and 20% of the municipalities were still not convinced of the benefits of e-procurement. The picture got much better in 2019 already – the knowledge of Peppol has increased and many more entities in the public sector have taken the e-procurement implementation as a target for the upcoming years. Of course, Peppol with BIS3 is the recommended solution here.
Finland has been the forerunner in e-invoicing since the end of the last century (a long time ago, isn’t it) already. I believe that it is one of very few countries (if not the only one) in the world where the public sector has been able to reach amazing numbers (+90%) of e-invoices without even mandating it to businesses. Norway at the same time is a positive example of how the public sector has led by example. In 2012 the Norwegian public sector de facto-mandated B2G e-invoicing using the Peppol network. Since then the penetration of E-invoicing has grown nicely and the e-invoicing level in the central government is today around 85%. The best outcome of the Norwegian public sector success story is how it has also influenced the B2B business. Actually, most of the private sector uses Peppol for e-invoicing nowadays as well. This is because once Peppol was taken into use by public sector demand, the users discovered the benefits for themselves, and Peppol in Norway has become a vital part of the business environment today.
E-Procurement in the Norwegian public sector is high on the government agenda. Digitalizing the pre-award process and contract management, enabling dynamic purchasing systems, and integrating pre-award and post-award processes are just some of the strategic topics to be executed during 2020-2024. As of today at least 25 – 30.000 public purchases every month are executed in the Peppol network. The Peppol network is a vital part of the public sector e-procurement digitalization strategy in Norway as well as in Denmark and Sweden.
I think it’s exciting to see all those digitalization initiatives in the Nordics. Also within the Nordic Smart Government program, this will become a hot topic for all members in order to ease up the trade between the public and private sectors.
Peppol BIS3 – what is this all about
Now, let’s take a moment to look at Peppol BIS3. If you are like me, you probably already got excited when you read about Peppol BIS3 above. Just to remind you – the Peppol BIS3 family is seen as a catalyst for Nordic e-procurement. Peppol BIS, aka Business Interoperability Specification, is a Peppol-defined implementation guideline for business messaging around e-procurement. The first baby of the BIS3 family was the set of BIS3 billing documents – invoices and credit notes. As Europe introduced a new standard for e-invoicing in 2017, Peppol implemented that standard into the BIS3 billing message (UBL-based document format as all the rest of BIS3 messages). As of now most of the Peppol network is using already BIS3 invoice messages in invoice exchange. The initial plan was to phase out BIS2-related invoice messages by the end of 2019 but unfortunately, that plan was too ambitious. But there is a clear plan to phase out BIS2 Invoices still within 2020.
Next to invoices and credit notes there are other BIS3 documents like orders, catalogs, despatch advice, etc which are available in the Peppol network as well. Those documents were introduced a bit later but the phase-out day is coming soon also for them. According to Peppol policy, all of the users who support any of the named documents must also support BIS3 family messages and since May 15th, 2020 Peppol BIS2 messages shouldn’t be used anymore. It remains to be seen if there will be some last-minute change to the deadline as well as it was with BIS2 invoices. Though I want to emphasize to all of you who are using BIS2 family e-procurement messages (see the full list here) in the Peppol environment – it is very last minute to ask your service provider how you could transfer to BIS3. After all, as stated above – the Peppol BIS3 family is a catalyst for Nordic e-procurement and I believe you want to be a part of that journey.
Ahti Allikas has been active in the e-invoicing industry since the year 2000. He currently works as Head of Partners and Networks at OpusCapita, and is responsible for the development of the e-invoicing ecosystem. Ahti is a member of the executive committee of the European E-invoicing Service Providers Association (EESPA), member of management committee of the OpenPeppol Association (Peppol) and also member of E-Invoicing expert group in the European Multi-Stakeholder Forum on E-Invoicing (EMSFEI).