Ardent’s FinTech Influencer Series highlights innovative voices in the world of Accounts Payable (“AP”) automation. This series is the go-to spot for progressive thoughts on how technology, transformational thinking, and revolutionary ideas are changing how AP work gets done. Continuing our FinTech Influencer Series, today we are speaking with Hiroyuki Kato, Director, Japan Peppol Authority, Government of Japan
Ardent Partners: Welcome Hiroyuki and thank you for spending some time with me today. Let’s get started. Please tell me about your role and responsibilities as Director, Digital Agency for the Government of Japan.
Hiroyuki Kato: I have been playing a key role in the initiative to promote the widespread use of standardized and structured e-invoices (“digital invoices”) in Japan. And I also have been participating actively in some projects in OpenPeppol, such as “PINT (Peppol International Invoice Model) project” as a representative of the Japan Peppol Authority, together with members of the Japanese business sectors.
Ardent: What is Peppol and why is it important for governments and businesses?
HK: Paper-based invoicing causes inefficiencies and lowers productivity. On October 1st, 2023, we will implement a new input tax credit method, called the “Qualified Invoice Based method”, which will provide a huge improvement over paper-based invoices and is one of the most important missions as we seek to enable economic growth.
To accomplish this, the invoice data should be directly linked from a supplier’s system to that of the buyer by using the digital invoice. For that, we are sure that there is no option but to adopt Peppol as our e-invoice standard since the scheme of Peppol itself is a digital invoice.
Ardent: When did you join OpenPeppol?
HK: In September 2021, the Digital Agency was established and joined OpenPeppol as the authority in Japan. So, our journey is still at an early stage and we are looking forward to providing Peppol services in Japan.
Ardent: What is the Japanese Government’s perspective with respect to Peppol?
HK: We have already made the draft of our Peppol e-invoice specification. So, in near future, Peppol services will be provided in Japan. We hope that Japanese businesses, including SMEs, will enjoy the benefits of Peppol services in the latter of half of this year.
To gain widespread use, the Government of Japan intends to provide the necessary support, including budget support for SMEs to adopt or update and improve their current invoicing systems.
Ardent: How has the Peppol initiative been received by Japanese Service Providers and businesses?
HK: Japanese businesses initially were a bit reluctant to embrace the new input tax credit method, as it they thought it would likely result in an increase in the volume of paper to be handled and result in negatively impacting efficiencies and productivities.
However, after learning of the experiences of Peppol e-invoice adoption in Europe and other Asian countries, it is now understood that the Peppol e-invoice, instead of paper invoice, would have a positive impact.
Based on our findings, Japanese service providers formed an association called EIPA (E-Invoice Promotion Association) in July 2020 to promote the widespread use of the standardized and structured e-invoice in Japan.
The EIPA has been working with us, to ensure that Peppol e-invoices will not only enable Japanese businesses to meet the legal requirements, but also help them to improve their efficiencies and productivities.
Ardent: What benefits have you received by adopting Peppol standards for e-invoice?
HK: Peppol e-invoice is standardized and structured, so that the invoice date can be exchanged between systems of the supplier and buyer directory. This means that the invoice can be processed automatically. So, we are sure that the Peppol e-invoice will greatly contribute to reduce the costs and manpower required to process invoices. And, at the same time, it will also enable Japanese businesses to increase the efficiencies and productivities in their back-office processes.
In addition to that, looking at the use cases in other countries, Peppol e-invoice itself creates new values and benefits. For instance, by providing transaction data in Peppol e-invoices directly to financial institutions, the businesses can enjoy preferential rates. We are sure that benefits such as these will also motivate businesses to use Peppol e-invoice.
Ardent: What lessons have you learned along the way?
HK: We have been learning a lot from this initiative. In particular, we have been reminded of the importance of working in collaboration with businesses, including the potential Peppol service providers.
Our Peppol e-invoice is created for B2B e-invoices. Therefore, we understand it is necessary to consider their opinions and requests as the e-invoice specification is created. We are sure that our Peppol e-invoice will be used more since it was developed in collaboration with businesses and is user-friendly for them.
Ardent: What advice can you provide to other countries and regions looking to adopt Peppol?
HK: When developing your own specification, you might find there are so many things to consider, much more than you initially thought. We all have heard the saying “haste makes waste”. We strongly believe that anyone who wants to adopt Peppol e-invoice should first consult OpenPeppol. The knowledgeable experts of OpenPeppol are available to help guide you in the appropriate direction and show you the best, and quickest, way to reach your goal..
Ardent: Thank you for your time and best of luck on your presentation at the Exchange Summit on May 9th – 11th in Miami.
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