The next disruptive innovation that is soon set to become business as usual is electronic invoicing (e-invoicing). It gets rid of time-consuming manual processes. It creates visibility into financial processes. It’s significant for organisations to manage their finances. It enables companies to be more creative with their payment strategies. For many businesses it’s simply a tool for survival.
The only barrier to the uptake of e-invoicing is mindset. There was a time when the internet was doubted & questioned. Few people believed we could use almost all services digitally. Online banking was met with great scepticism. We have seen a paradigm shift in mindset and the same will happen with e-invoicing.
E-invoicing will prevail, this is inevitable. What we don’t know is how long it will take. As with everything, some countries and industries are front runners in the market. In the e-invoicing space it’s the Nordics and the auto industry. In Portugal, e-invoicing has led to 30% more taxable invoices being processed and it is estimated that if adopted by the UK government, e-invoicing could save the public sector £2billion per year and impact GDP by an enormous 0.3%. If the US decides to become a front runner, there is no doubt that the uptake of e-invoicing will grow exponentially.
We are also seeing clear signs in the industry that point to the need for e-invoicing. More and more organisations are looking at how they can improve cash flow and their working relationships with customers and suppliers. Alternative finance platforms provide an ideal route for businesses wanting greater flexibility with their payments. But one issue when considering these platforms has been the need to prove that invoices have been accepted and approved by the customer – and this responsibility lies with the supplier. This is where e-invoicing can help. E-Invoicing and automation can supply the transparency required to provide this important proof point.
In a paper based system, a supplier would send an invoice and wouldn’t have confirmation of invoice receipt or approval until they actually received the payment or had to chase for payment. With e-invoicing, the supplier can see the status of their invoice, they can see it has been approved and can prove that the invoice is valid for payment.
When combined with the provision of alternative finance, e-invoicing really starts to transform the way that businesses think about payments. Alternative finance options facilitated by electronic transactions across an international commerce network, provides suppliers and buyers with a seamless and flexible way to manage their finances. Suppliers can receive payment against an invoice more quickly whilst buyers still have the option to hold onto their cash.
We recently announced our partnership with MasterCard – to provide organisations with a new e-payment solution which means suppliers can have greater flexibility over their terms. The e-payment service is enabled by the Basware Commerce Network, which is connected to the MasterCard global payment network and leverages MasterCard’s unique suite of payments products.
The launch of this service is just one example of how e-invoicing is evolving from being a largely technical service focused on delivering process efficiencies, to one that is able to deliver transformational commercial benefits to the business.
Basware's Commerce Network already processes over 50 million invoices annually, totaling more than US$420 billion across 900,000 trading partners in 100 countries. This scope and reach is combined with MasterCard's international payment network covering over 150 currencies across more than 210 countries and approximately 20,000 financial institutions. The new service will make sure suppliers get guaranteed early payment without placing any additional burden on buyers, creating a vital economic buffer for businesses of all sizes.
Commerce will enter a new era as businesses are able to manage cash more efficiently while delivering increased speed, safety and control throughout their financial processes. Supplier and buyer relations will become more collaborative and, in doing so, will open up new opportunities to innovate in the market.
The global economic climate itself calls for e-invoicing to become widely adopted. In times of economic constraint we can’t rely on others. Organisations themselves have to innovate and self-govern.
By creating transparency, efficiency and control within its financial system, an organisation can survive and compete for a long time. In this context, it’s hard to argue against e-invoicing to become business as usual.