Digital Business Documents and Product Information: Solution Area A

While the SME can automate many processes themselves using their digital business systems, there are certain processes that rely on the digitalisation of government and trading partners. The Nordic countries all have ambitious national initiatives in the field of digitalisation, but perhaps due to their national starting point, some of the solutions are not by default setup for cross-border transactions. eDocuments are the digital documents for each step of the transactions between companies, being produced in digital bookkeeping systems (ERP-systems).

Definition of eDocuments: “any transactional document which is exchanged between trading partners in an electronic format and manner. Distinct from PDF or image files, e-documents are machine readable and typically exchanged via software or online platforms rather than email. E-document types include, but are not limited to: purchase orders, invoices of various types, credit/debit notes, correction invoices, dispatch advice, goods receipt notes, payment instructions.” (Pagero, 2020, https://www.pagero.com/blog/what-is-an-e-document). See more in the abbreviation list.

This NSG&B working group on Digital documents and Product information – in short – eDocuments (SA-A) – has explored the area and identified the Peppol network

PEPPOL (Pan-European Public Procurement Online) is a non-profit organisation based in Belgium with the purpose of establishing a common and standardised infrastructure for digital exchange of business documents. A PEPPOL Authority is a department within the public authorities of each PEPPOL country and, currently, there are 17 participating Peppol authorities, mainly in European countries, but in the past years, Japan, Singapore, New Zealand, Australia and Japan have joined. The primary purpose of the PEPPOL Authority is to approve new PEPPOL Access Points, which typically are ERP-system providers, that enable their customers - the companies - to send eInvoices and other eDocuments on the Peppol network (Peppol, 2024, https://peppol.org/about/for-end-users/). See more in the abbreviation list.

to work as a common format for all Nordic countries, and it has conducted a range of successful pilots regarding cross-border transactions by exchanging eDocuments between digital business systems on the Peppol network. If implemented, it means  that businesses in one Nordic country can send an automatic eInvoice as well as use eOrders and eCatalogues to another business in another Nordic country, and that can save time on manual administration.

Definition of eInvoice: “Electronic invoicing is the exchange of an electronic invoice document between a supplier and a buyer. An electronic invoice (eInvoice) is an invoice that has been issued, transmitted and received in a structured data format which allows for its automatic and electronic processing, as defined in Directive 2014/55/EU.” (European Commission,  2024, https://ec.europa.eu/digital-building-blocks/sites/display/DIGITAL/What+is+eInvoicing). See more about the different types of eDocuments in the abbreviation list.

For the eReceipts, the NSG&B has done a specification based on Peppol BIS using additional item property fields to include eReceipt specific information, and this solution works cross-border in the Nordics. These pilots and MVPs are done in close cooperation with – and carried out by – Nordic system providers and companies. This chapter goes into detail about these pilots, the possible benefits for Nordic SMEs and the future work in the area.

The NSG&B working group on eDocuments focus on the digital documents related to the day-to-day transactions in a company, e.g. sending and receiving orders, invoices and receipts as well as bookkeeping, accounting and reporting to the government. Increasingly over the years, these processes have shifted from sending PDF invoices and other PDF attachments by e-mail to gradually being tech supported and moving towards full automation. While the SME can automate most of these processes by themselves using the various digital business systems on the market, there are many of these processes that rely on the digitalisation of government and the trading partners of the SME.

The system providers deliver a range of digital business systems that perhaps can work internally in the company, but they are not necessarily compatible with the business systems of their trading partners, thus when it comes to sales and purchases, there can still be a range of manual processes to do for the SME. Paradoxically, this type of digitalisation without interoperability between the different digital systems tends to benefit the larger companies at the expense of the SMEs because the SME would typically need to comply with the larger trading partner’s system. This can, for some SMEs, result in a situation, in which the SME should access, for example, 20 different platforms in order for them to send invoices to their 20 different trading partners.

On a European level, EU countries have worked on the interoperability of these various eDocuments. Member states have implemented the EU eInvoicing directive since 2019 focusing on one of the core eDocuments – eInvoicing – for public procurement.

European Commission, 2024, https://ec.europa.eu/digital-building-blocks/sites/display/DIGITAL/What+is+eInvoicing.

Moreover, the European Committee for Standardization (CEN) has different committees (TC434, TC440) that work on developing common eDocuments standards.

The CEN group - TC434 can be found here: StandICT.eu, https://standict.eu/standards-repository/working-group/centc-434-electronic-invoicing, 2024. The CEN group TC440 can be found here: CEN, 2024, https://www.cencenelec.eu/areas-of-work/cen-cenelec-topics/public-procurement/cen-tc-440-electronic-public-procurement/

One of the formats of eDocuments that is used globally with 17 participating authorities is the Peppol network that has specified eDocuments from tender to invoice.

In the NSG&B Implementation Plan in 2021, the stated scenario for 2024 for this working group area was that: “SMEs can send and receive invoices and receipts, and issue and receive orders to and from their Nordic trade partners in a way that makes it possible to automatically process for bookkeeping, payment and VAT-calculation, etc. SMEs can use standardised product IDs across the Nordic borders in the business documents they receive for the automatic calculation of VAT, product specific fees, inventory etc., but also in documents connected to e-orders, e-catalogues that they send to their customers, etc.”…also including “…product-specific documentation on pesticides, chemicals, goods in food production or green data on, for example, ecological or FSC certificates.”

The NSG&B working group on eDocuments has focused its efforts on enabling the automatic transactions of the eDocuments between the different ERP-systems that SMEs use. For SMEs, this would be particularly beneficial because they would not need to comply with a range of different procedures from their different trading partners, they would in principle only need to click to accept eInvoices (and other eDocuments) in their ERP-systems once, and then their B2B sales and purchases would automatically be documented and accessible in their ERP-system irrespective of their trading partners’ systems. Another benefit is that machine readable eDocuments could be a vehicle for the automatic data collection of product information - including environment information and VAT that both have long-term potentials of enabling automated reporting to authorities.

The working group on eDocuments has worked with the following three overall topics that are outlined below and more detailed on the NSG&B website:

eInvoicing, eReceipts, eCatalogue and eOrder are so-called structured electronic documents that can be sent from one ERP-system to another, and both the seller and buyer will have a transparent process with common data formats.

See appendix for further definition of the various types of eDocuments.

The Peppol network has the prerequisites for these eDocuments and the transmission between the buyer and seller on a global basis - at this point for 17 countries - because it offers a well-specified format and distribution path. However, the different digital business systems are not all fully aligned with Peppol in all aspects. The eDocument working group has delivered the documentation of the eInvoice, eCatalogue and eOrder pilots using Peppol BIS and Peppol Network as well as eReceipts for cross-border use in the Nordic region which is outlined below and in detail on the NSG&B website.

The purpose of this pilot was to verify that the eInvoice format BIS Billing (the Peppol Business Interoperability Specification) and credit note can be used cross-border between ERP-systems in the Nordic countries and that the information is according to the Peppol format requirement. Ten SMEs from all Nordic countries having an ERP-system with Peppol BIS billing 3.0 participated in the pilot. The result was a verification that it is technically feasible to send and receive eInvoices via the Peppol network directly from one company’s ERP-system to another company’s ERP-system located in another country. However, the pilot did show some loss of data quality due to the differences among business systems.

For the eCatalogue and eOrder pilot, the goal was to verify that the Peppol-formats connected to eCatalogue and eOrder can be used cross-border between Nordic countries and that the information (content) is according to the standard format requirements. Nordic SMEs and system providers participated in the pilot that successfully used eCatalogue and sent eOrders cross-border in the format of Peppol BIS cross-systems.

In 2021, Eurocard did a survey on the use of different receipt management processes in Nordic companies showing that 58% of companies use paper or photo/​scan solutions and 42% of companies use some type of digital system for receipt management.

Eurocard, 2021, https://eurocard.com/expense-handling-services/smart-receipts/report-2021/

There is a growing market offering a range of digital systems for companies in this area, and increasingly companies are using these digital systems. However, not all systems are in an open, structured eReceipt format that is interoperable with the systems of other companies. The working group did a pilot on the use case of business travel where an employee in one Nordic company goes on a business trip to another Nordic country. It was tested that a hotel company and a taxi company sent an eReceipt to the employee’s company. On the taxi eReceipt, payment information, identification of the car, pickup location and end location and the number of kilometres driven were all included, thereby enabling the systematic collection of environmental data along the way. The pilot successfully completed a transfer of an eReceipt from a seller’s system via the Peppol Network to the buyer’s system and into the buyer’s travel system, and then made the eReceipt available to the employee for reimbursement. The companies (merchants) having digital solutions for eReceipt can gain additional benefits from holistic, verified data, like getting more attractive, flexible short term financing options, relevant marketing opportunities etc. eReceipt might also bring additional value in controlling the grey- /​shadow economy, estimated to be around 20% of EU GDP on average. Even small impact would be significant as a preventative method, not to mention the potential for forensic auditing etc. functions. While the NSG&B focus on B2B use cases, B2C (or even C2C) use cases can be taken into consideration moving forward.

Businesses need to comply with a range of new requirements related to the new EU-regulation on CSRD and Ecodesign.

European Commission, 2024, https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en

The format of eDocuments can be used to include environmental information for each product.

The forthcoming EU legislation on digital product pass (DPP) underlines the perspectives of including product information into eDocuments. (DIGITALEUROPE, 2024, https://www.digitaleurope.org/projects/digital-product-passport/ ). Moreover, the Global Product Classification is relevant regarding this (Global Product Classification, 2024, https://www.gs1.org/standards/gpc).

This can be used to ease the administrative burden of data collection and footprint calculations as well as make green procurement easier. The NSG&B working group on eDocuments has worked to include environmental information in its pilots as listed below. This can be seen as a first limited test on an interoperable format that works cross-border for environmental data, but it has not been piloted for a broader scope, and more work is required for the eDocuments to support the implementation of the European Union CSRD directive.

The pilot on eCatalogue (as outlined above) was also a test on whether the format was able to serve as a “vehicle” for carrying environmental information about the purchased product. The product in the eCatalogue pilot contained three different types of data describing the environmental footprints including environmental labelling of goods and CO2-emissions, and a link to an external database detailing the relevant footprints. The Peppol BIS eCatalogue format was then used to carry information about the environmental footprint at the product level in the eCatalogue. The test demonstrated that these formats are capable of carrying such information and it is possible for the other party to use that information as structured information.

Along with the payment information on the eReceipt pilot for a taxi drive purchase, the identification of the car, pickup location and end location as well as the number of kilometres driven were included, thereby enabling the systematic collection of environmental data along the way.

In relation to setting up the collection of standardised product data more broadly, an international classification system for products and services established by the United Nations UNSPSC (United Nations Standard Products and Services Code) can be used. The use of UNSPSC-codes in different fields in electronic invoices gives companies possibilities for structured data collection. The NSG&B working group has developed a tool for SMEs to find the correct UNSPSC-code for different products and services.

It is mandatory for businesses to report and pay VAT in their home country. However, when businesses trade cross-border, there are different VAT obligations depending on where you buy from or sell to as well as whether you are trading goods or services. The European Commission published its ViDA-proposal (VAT in the Digital Age) in 2022 which is a comprehensive reform aimed at modernising and streamlining VAT processes across the European Union to address the challenges posed by digitalisation and the platform economy.

European Commission, 2024, https://taxation-customs.ec.europa.eu/taxation/value-added-tax-vat/vat-digital-age_en

The contributions of the NSG&B working group include suggestions for how to implement the ViDA-proposal nationally as well as to address the cross-border VAT issues which are outlined below.

It is mandatory to include the correct VAT on an invoice, and there is a set of VAT TAX Category Codes that should be used to state the correct VAT category as well as VAT rate for each product or service in an invoice. There are separate VAT category codes for domestic sales, exports and intra-community trade and they are typically set up by default for the business in its ERP-system and in its VAT reporting. If codes are reliable and precise, this procedure can be done automatically. If codes are unreliable and too general, VAT handling requires manual work in many situations in order to apply the correct VAT method for the invoice. In order for systems providers to use similar codes for similar situations, such as export and intra-community supply, the eDocument, the working group has produced a VAT guideline for cross-border transactions as well as a recommendation to the EU.

NSG&B, 2024, https://nordicsmartgovernment.org/vat-guideline-cross-border-transactions

Businesses are entitled to a VAT refund of purchases for taxable operations. In many cases, ERP-systems handle the VAT refund of domestic purchases automatically or semi-automatically. However, for businesses that purchase goods or services in another country, a special VAT Refund application may be required for the business to get their refund. This VAT Refund procedure is typically a manual procedure.

Using eReceipts, VAT information for these purchases could be made more accurate and support the digitalisation of the VAT refund process, potentially reducing the manual workload for VAT refund applications.

It is challenging to test the use case for VAT refund on eReceipts because, currently, only a limited number of sellers use eReceipts. The working group on eDocuments has delivered a process and a draft VAT refund specification for the use cases of business employees’ travel purchases.

Based on Nordic countries’ application forms and xml files from the EU, the working group has created a machine-readable application form (xml) where either an eInvoice or eReceipt can be used as documentation for the application. This has been sent for review in Nordic Tax Authorities. The VAT refund specification and VAT refund user story can be found on the NSG&B website.

For future work, it can be suggested to pilot the submission of applications from an applicant system. Moreover, it will require adjustment of existing travel expense systems and bookkeeping systems on the business side as well as systems on the government side to automate these types of refund applications from businesses. It should be noted, however, that in the current refund application form, there is information that businesses need to fill in, which is not included in eReceipts, and this needs to be adequately addressed.

The working group on eDocuments has done a pilot on how data from eInvoices can be collected and reported to tax authorities in an automated and secure way that is aligned with the European Commission’s ViDA proposal. The starting point was the concept of Continues Transaction Control, CTC, which can be developed within the Peppol network.

The purpose of the pilot was to use the existing information on a Peppol eInvoice sent through the Peppol Network as a basis for reporting to tax authorities as could be required in the ViDA proposal. The content to be reported included the data mentioned in the article 263 of the VAT Directive proposal. Furthermore, the correct use of VAT codes and rates in transactions was tested. The pilot successfully included 60+ transactions and demonstrated that it is possible to automate ViDA reporting in this way using the current Peppol network. The feedback was that the quality of VAT codes and rates should be improved in the eInvoice so that the ViDA report does not contain the same weaknesses as a recapitulative statement at the moment. This was then addressed in the follow-up pilot (below).

In this second part of the ViDA-pilot, the objective was to improve the ViDA Report and to test more aspects of data and perspectives both cross border and domestic. The pilot included all Nordic tax authorities together with five service providers representing one country each. Besides e-invoices, this pilot also captured credit notes, where a sent credit note must refer to a former sent invoice (debet). ViDA Reports were created for both invoices (debet) and credit notes. This pilot delivered ViDA reports both in cross-border- and domestic invoice transactions and thus the exchange of several hundred eDocuments – Invoices, electronic credit notes and ViDA reports.

As the first pilot, the second pilot also pointed to a need for improving the quality of VAT codes and rates in the eInvoice so that the ViDA report does not inherit errors. The Peppol Authority and tax authorities of each country can support the work of the service providers and SMEs to register the correct VAT category codes in the eInvoice. Here, the NSG&B guide for SMEs and accountants on VAT codes and rates in Peppol-documents can help with better mapping, and validation that can increase the quality of VAT codes and rates.

NSG&B, 2024, https://nordicsmartgovernment.org/vat-guideline-cross-border-transactions. See appendix for details in this area.

However, both pilots showed that, despite the need for increasing the data quality, it is possible to automate ViDA reporting in this way using the current Peppol network as an infrastructure or vehicle for this exchange. Automation of VAT reporting comes with benefits of faster and more efficient processes in companies and authorities, potentially with a higher degree of data quality.

In sum, the NSG&B working group on eDocuments has explored the following areas: 1) Interoperability of eDocuments – using eInvoicing, eCatalogue eOrder and eReceipt cross-border, 2) Including environmental product information in eDocuments and 3) Contributing to the digitalisation of VAT processes. The working group has identified the Peppol network to work as a common format for all Nordic countries regarding eDocuments such as eInvoice, eOrders and eCatalogue. For the eReceipts the NSG&B has done a specification based on Peppol BIS using additional item property fields to include eReceipt specific information. This solution works cross-border in the Nordics.

The result of these NSG&B pilots is that, if implemented, businesses in one Nordic country can have an automated trade process with another business in another Nordic country using their existing ERP-system. These pilots and MVPs are done in close cooperation with – and carried out by – Nordic system providers and companies, which are key for the future work of putting these automated processes into use in companies.

Moreover, the eDocument format can be used as a vehicle for including additional product information, and with the increasing amount of reporting requirements on the climate footprint of businesses in the CSRD regulations, the working group has successfully demonstrated that the climate data of products can be included in eDocuments such as eInvoice and eCatalogue, for example.

For companies using these digital processes there can be significant cost savings and possibly reduced CO₂ emissions, while empowering holistic digital value chain and creating new data -driven ecosystems, including but not limited to CSRD reporting, digital product passport, etc. For instance, the companies having digital solutions for eReceipt can gain additional benefits from holistic, verified data, like getting more attractive, flexible short term financing options, relevant marketing opportunities, etc. eReceipt might also bring additional value in controlling the grey- /​shadow economy, estimated to be around 20% of EU GDP on average. Even small impact would be significant as a preventative method, not to mention the potential for forensic auditing etc. functions. While the NSG&B focus on B2B use cases, B2C (or even C2C) use cases can be taken into consideration moving forward.

Finally, the ViDA proposal from the European Commission comes with a range of changes and possibilities for member states to further automate VAT-reporting on cross-border trade within the EU, and the working group has successfully conducted a pilot on automated VAT-reporting that is integrated into these above trade processes using eDocuments. Furthermore, the working group has provided suggestions for how to support the further digitalisation of cross-border VAT processes by ensuring correct automated assigned VAT Category Codes and easing the VAT refund application for purchases in another country.

The initial scenario in this area that was set up in 2021 for the Implementation Plan of SMEs - to have automated processes using eDocuments – is indeed possible because of the efforts of this NSG&B working group and the national efforts in the Nordic countries that have facilitated that eDocuments can work for cross-border trade in the Nordics using Peppol - and potentially beyond the Nordics as well. However, while possibilities for SMEs exist, the implementation of these new core business processes remain to be rolled out to achieve the benefits of this scenario on a societal level.

Table 2: Overview of deliverables from the NSG&B working group SA-A Digital documents and Product information: purpose & result, impact and next step.

On the basis of the NSG&B deliverables listed above, future cooperation in this area can aim to further specify and develop the digital infrastructure for cross-border trade in the Nordic region. This can be done by focusing on further developing the interoperability of the eDocuments using the Peppol network by developing the specifications and data quality, including working on how to include environmental product information in eDocuments in an interoperable way. This work has the potential to contribute to the national implementation of the EU regulations in the area, most notably contributing to the future implementation of a ViDA-proposal and the CSRD regulation.

Therefore, this working group has agreed to proceed working in this area with a pre-project on Green eDocuments, funded by the Nordic Council of Ministers, Committee for Sustainable Growth, for Autumn 2024, to explore how to include a selected set of green data – the CO₂e – into selected types of eDocuments in an interoperable way that can be accessible directly from SMEs ERP-systems and work for cross-border trade in the Nordic region.