Japan's PEPPOL e-invoicing roadmap: what you need to know

December 22, 2020
Mesh Flinders

Japan has become the latest country to announce it will be rolling out a national e-invoicing network based on the PEPPOL (Pan European Public Procurement On-Line) standards.

One of the first milestones in the initiative has been the formation of a dedicated E-invoice Promotion Association (EIPA) which will help develop a ‘Japanese standard specification’ that aligns the PEPPOL framework with regional laws and business customs. Founder members of the EIPA include Tradeshift, as well as local and international IT vendors. Tradeshift will serve as a Certified Access Point Provider and Preferred Solutions Partner for the project. The company will also support the Japanese Government in promoting PEPPOL through marketing initiatives.

Tradeshift is a founding member of the OpenPEPPOL organization and is an authorized Access Point provider. Tradeshift’s founders launched PEPPOL and their work is what started Tradeshift’s global digital network

Originally intended as a means of standardizing cross-border, electronically supported public procurement procedures within the European Union, PEPPOL is becoming popular in other countries looking to digitize the exchange of business documents. Leading APEC economies have been inspired by the successful implementation of PEPPOL in Singapore. Australia and New Zealand recently announced similar plans, while India’s own mandatory e-invoicing program went live on 1st October after a series of delays.

Why is Japan adopting PEPPOL standards?

The move to standardize e-invoicing in Japan has been championed by Takuya Hirai, Japan’s Minister for Digital Transformation, who earlier this year announced plans to launch the administration’s promised aigital agency in 2021 to improve the efficiency of government services.

Despite its reputation for innovation, both the Japanese government and a majority of businesses across the region have continued to rely heavily on the exchange of paper documents. Less than 12 percent of administrative work in the country is conducted online, according to Japan Research Institute.

As in other countries, COVID-19 exposed the limitations and inefficiencies of paper-based processes in Japan. With a majority of workers forced to transition to a remote-working environment, many of the processes they had previously relied on broke down. Hirai admitted in a recent interview that Japan had suffered a ‘digital defeat’ during the pandemic.

The case for digitization

According to one estimate, failure to embrace digitized process is costing the Japanese government 323 million working hours per year, at a cost of $8 billion. Businesses across the region are also grappling with inefficiency and avoidable costs as a result of their reliance on paper invoices.

Beyond the administrative burden of paper-based invoicing, digitization can also unlock faster payments to suppliers, as well as increased visibility, transparency and compliance across supply chains. These will be vital components as organizations look to learn the lessons of the pandemic and build resilience to future disruption.

What happens next?

Japan plans to roll out its e-invoicing system in October 2023 and while precise details of the initiative are still to be finalised, the EIPA will publish plans for domestic standard specifications for PEPPOL in Japan by the end of June 2021. The association aims to enable operators to start using software that supports the local electronic invoicing standard by fall 2022.

What to do now?

Regardless of whether you’re a business owner operating uniquely in Japan, or part of a multinational corporation with a presence in the region, you’ll need to start considering today how these changes might affect you, and what you need to do to be ready in time.

As one of the Certified Access Point Providers, Tradeshift can help businesses manage the transition seamlessly, ensuring they have the necessary infrastructure in place in good time. We’ve also worked with Gartner to produce a guide to help you through the process of choosing an e-invoicing provider that’s right for your business.

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