The Peppol e-invoicing system began as an EU pilot for public procurement, before being implemented in an increasing number of countries, including Australia, Singapore and Japan. And what began as a business-to-government tool now increasingly encompasses all manner of business-to-business (B2B) activity too.
E-invoicing via Peppol is now mandatory for all B2B transactions between VAT-registered companies in Belgium, and will become mandatory in many other jurisdictions between 2026 and 2030. There are different levels of implementation, with some countries only mandating businesses be able to receive these electronic invoices, and others implementing Peppol for companies above a given size. But these are only the initial requirements, with a planned roll-out across all EU B2B activity by 2030.
So, if you’re in a commodity trading firm, what will Peppol actually mean for your business, and how can you unlock the best efficiencies and value from it?
What is Peppol?
Peppol (Pan-European Public Procurement On-Line) is a standardised framework for exchanging electronic invoices. Peppol itself is a network that allows organisations to send and receive business documents in a standard format.
Peppol uses Access Points – certified service providers – that act as secure gateways to the network. The Access Point serves as a bridge between the organisation’s accounting system and the Peppol network, validating documents and converting them to the standard format.
Using Access Points allows more choice for businesses, as any Access Point can connect to any other on the network; there is no need to use the same system as your counterparties. And once connected, a company can exchange documents with any other business on the Peppol network.
Governments are increasingly encouraging or mandating the use of Peppol for two main reasons:
- To create standardisation and facilitate electronic trade documents, without the need for all parties to agree to one system.
- To move towards a complete digital tax regime and create automatic VAT records for authorities.
What does Peppol mean for commodity traders?
There are many benefits for commodity traders managing hundreds or thousands of transactions across multiple counterparties and jurisdictions, but also some potential challenges and considerations.
Electronic invoicing
Commodities have increasingly been moving towards e-invoicing, but until now many have found themselves held back by legislation that failed to keep up. But Peppol will ensure electronic invoicing becomes the norm, creating efficiency and reducing errors and administration. Reducing the time between invoice generation and payment also improves cash flow and working capital management – critical factors when margins are tight.
And if your Commodity Management and accounting systems are fully integrated with your Access Point, the risk of manual errors such as mistyping or misplacing documents is also significantly reduced, further improving efficiencies and therefore profitability.
Compliance and audit trails
As regulatory requirements around invoicing and tax compliance tighten globally, Peppol provides a clear, auditable trail of all transactions. If you are not already using a Commodity Management System that tracks all transactions across the contract lifecycle, Peppol can provide this audit trail for tax purposes.
And in jurisdictions implementing a so-called 5-corner model (the tax authority is an additional “corner” on top of the sender, sender’s Access Point, receiver’s Access Point, and receiver), the tax authority receives all VAT information without any manual intervention or reporting from the trading company.
Interoperability
The Peppol framework can help trading firms with less developed Commodity Management platforms exchange documents between their own and counterparty systems. Your counterparties don’t need to use the same software as you – as long as you’re both connected to the Peppol network, documents flow smoothly between systems.
And if you have the right Commodity Management software, documents can be automatically imported into your systems without manual intervention – again improving efficiency, reducing errors and risk, and improving the bottom line.
Reducing Complexity: Integrating With the Commodity Management System
Peppol Access Points are designed to integrate with accounting packages. But this is not where commodities businesses carry out much of their day-to-day activities around pricing and invoicing. This is why Gen10’s clients requested we create an integration directly from our CommOS Commodity Management System to their Access Point. This is what it looks like in practice:
The invoice is created in CommOS as it would usually be when creating a PDF document, and instead of sending this document to the counterparty with a click, the invoice is routed through the Peppol Access Point automatically. The Peppol network then takes over, the client sees the invoice on their Access Point, pays the invoice, and ticks that the invoice has been paid, allowing the issuer to see the updated status.
But the complexity comes in when a commodity trader needs to query an invoice they have received. Some commodities are more complex than others, but the process of valuing goods means that prices can change at several points during shipping, such as after a quality inspection or weighing the lot. For commodity traders, settlement is rarely a matter of paying the invoice without question; our clients use CommOS’s automated pricing to value the lots and ensure the invoice is correct.
Because the Commodity Management System is where all the operational and quality information is collated, this is the system best able to value the lot and check invoices, allowing our clients to ensure the invoice has used the correct weights, pricing formulae, premiums and discounts. As well as the other services, such as associated haulage invoices, that also need to be managed.
This allows clients to manage pricing, invoicing, and querying within the one Commodity Management System where they keep all their operational information. They can create their invoice in CommOS and send the data directly to the Peppol Access Point, which uses the VAT number to connect the invoice to the counterparty. The transaction is sent into the accounting package at the same time, and any queries can be managed within CommOS, with the integrations ensuring that credits and reissued invoices are also seamlessly updated across all systems.
Conclusion
The incorporation of Peppol into commodity trading is yet another area where having a modern, flexible Commodity Management System becomes essential. Systems that are designed with interoperability at their core can add new integrations, including Peppol connectivity, allowing commodity traders to continue to manage all of their operations within one place.
Their systems can become more complex and interconnected, but the impact on their teams is one of reducing workload, by ensuring they are able to keep working within the one system, secure in the knowledge that their other systems are all updating in real-time, and providing a complete picture of all positions across the entire business.
Having a connected, complete commodity management system therefore allows your organisation to take full advantage of all the benefits of new standards and new technologies, without creating additional workloads, replicating activities across systems, or increasing operational risk.
To find out more about how CommOS allows our clients to manage their entire operation in one place, book a demo today.
