Everyone Is Talking About E-Invoicing. But the Invoice Is Really Just the Final Document in a Much Longer Business Process. If Our ERP Systems Can Now Exchange Invoice Data in a Structured Format, Why Not Do the Same with Purchase Orders, Order Confirmations and Dispatch Advices?
Hardly any digital transformation topic is keeping companies as consistently busy right now as e-invoicing. Which formats do we need to support? How do we receive invoices? How do we send them? Do we need Peppol? What does legislation require, and from when? All perfectly valid questions. Still, I sometimes wonder whether we are thinking a little too narrowly. After all, the invoice is only the final document in a business transaction. Before an invoice is created, a customer has ordered something. We have confirmed the order, picked and delivered the goods. Perhaps a dispatch advice was sent beforehand. And only at the very end of this chain does the invoice arrive. Yet it is precisely this final document that we are currently investing considerable time and money in so that two companies no longer exchange the information it contains via PDF and email, but instead allow their systems to exchange structured data directly.
Why stop there?
We’ve Been Doing This in Food Wholesale for Decades
In food wholesale, the electronic exchange of business documents is anything but new. EDI has been part of the industry for decades. Large retailers send their purchase orders electronically to suppliers, receive order confirmations and dispatch advices in return and ultimately process invoices electronically as well.
In principle, this works very well. But anyone who has implemented several EDI integrations will also be familiar with the other side of the story. A standard does not necessarily mean that two business partners use that standard in exactly the same way. There are different requirements, mandatory fields, specifications and mappings. So the connection needs to be configured, adapted and tested. And with the next business partner, at least part of the process starts all over again. That is not an argument against EDI. Quite the opposite. Without these connections, many processes in food wholesale would be almost unimaginable today. But it does explain why a new connection between two companies often becomes a small project of its own despite all the standards involved.
And Now Peppol Enters the Picture
Microsoft has announced a new feature for Business Central 29 that may not sound particularly spectacular at first. Electronic document exchange via Peppol is being extended. In future, this should allow not only invoices but also documents such as purchase orders to be exchanged between companies and their ERP systems in a standardised format. And that caught my attention. Many companies are currently taking a closer look at Peppol for the first time because of e-invoicing. Put simply, Peppol is an infrastructure that enables companies to exchange electronic business documents according to commonly agreed rules.
Of course, we could have a lengthy discussion about formats, access points and technical details. But I find another question much more interesting: if my company and my business partner are already connected to an infrastructure through which our ERP systems can exchange structured invoice data, why should that connection begin and end with the invoice? Why couldn’t the purchase order travel the same way and arrive directly in my supplier’s ERP system?
The customer creates a purchase order in their system, it is transmitted in a standardised format and arrives directly in the supplier’s ERP system. Nobody has to read a PDF, nobody has to enter an order received by email and, ideally, nobody has to develop an entirely bespoke integration just for that particular business relationship. Looked at this way, the idea is not actually new at all. It is essentially what we have been doing with EDI for decades.
EDI Certainly Isn’t Going to Disappear
It would be rather bold to declare the end of traditional EDI on that basis. And I do not believe that will happen at all. Particularly in food wholesale, established EDIFACT connections have been used for many years to exchange enormous volumes of business documents reliably. If a major retailer specifies how purchase orders, dispatch advices or invoices are to be exchanged with its suppliers, it is not going to change that process simply because Microsoft offers additional options via Peppol in Business Central.
And why should it? If a connection has been running reliably for years, there is no sensible reason to change it.
That is why I find the other side much more interesting: all those business relationships where there is no EDI connection today. The customer sends a purchase order as a PDF. The supplier sends an order confirmation by email. When a new business partner comes on board, the first step is to establish which format they support, which provider they use and what kind of integration is required. And sometimes, after all that discussion, you realise that the effort simply is not worthwhile for the number of documents being exchanged. So the process remains based on PDFs, emails and manual processing. That is exactly where I think Peppol could become interesting.
If the Connection Is Already There Anyway
E-invoicing is currently driving a development that we may be underestimating slightly. More and more companies are putting the technical infrastructure in place to exchange structured business documents directly between their systems. The immediate reason is the invoice. But once the infrastructure is in place, it does not simply disappear again. If my company is already connected and my customer or supplier is too, it would seem a shame to use that connection exclusively to transmit an invoice at the very end of the process. Perhaps, when onboarding a new customer or supplier in future, the first question will no longer be:
“Which EDI integration do we need to build?”
But instead:
“Can’t your systems already exchange this data using a standardised process?”
That would not make every integration unnecessary. But if five out of ten new business partners could be connected without bespoke development, that would already be a significant improvement. And not just in terms of implementation costs. A bespoke integration has to be documented, tested and maintained. If something changes on either side, the issue is back on the table.
As an ERP Partner, We’re Not Entirely Unaffected by This
At OTE, after all, we also make money by developing integrations. Over the years, we have built solutions that allow our customers to exchange data with suppliers, customers, logistics providers, webshops and many other systems. So you might think that we would not be particularly keen on a standard taking over some of that work.
I see it differently.
I do not want to sell five days of development if a standard can solve the same problem reliably. I would rather our developers spend their time on processes where the customer genuinely needs something specific. Experience tells us there are plenty of those in any ERP project. Standard solutions where standards work. Bespoke development where it makes a difference. That should really go without saying.
Perhaps E-Invoicing Is Just the Beginning
Business Central 29 will not make EDI obsolete. Peppol will not persuade the food wholesale industry to switch off its established EDIFACT connections tomorrow either. And we will probably continue dealing with PDFs, emails and bespoke integrations for a long time to come. Nevertheless, I find the direction of travel remarkable. Right now, we are talking a great deal about how to exchange invoices electronically. At the same time, we are building an infrastructure that could ultimately allow companies to exchange far more with each other.
The purchase order is simply a fairly obvious next step. After that, we can talk about order confirmations, dispatch advices and other business documents. Perhaps, in a few years’ time, we will look back at the entire discussion around e-invoicing and realise that the invoice itself was not actually the biggest change.
It simply resulted in a large number of companies suddenly being connected to one another. And once that connection is there, it would seem rather pointless to use it only for invoices.
E-Invoicing Is All Well and Good. But What About the Rest?
