China makes history – Blockchain e-invoicing is automating trust in the payment process
China produced a world-first in March this year, delivering a commercial example of blockchain e-invoicing. This wasn’t a test-case, it’s a new technology which underpins payments on the Shenzhen Metro System – set to handle 170,000 invoices per day!
This is the first large-scale commercial use of these two disruptive technologies together. Now that this technology has been demonstrated at such scale, it’s likely that we’ll see far more of this powerful combination.
Blockchain and e-invoicing are words which many businesses would have happily ignored a decade ago, some even 5 years ago. However, these days it’s hard to argue against the waves both technologies are making in the business world.
Blockchain e-invoicing is the culmination of these two disruptive technologies. Few businesses will be looking to roll out Blockchain e-invoicing just yet, but it’s undoubtedly coming. And not without good reason.
What is blockchain e-invoicing?
To understand blockchain e-invoicing, it’s important to have a solid grasp of what blockchain technology is. Why not take a look at our white paper on Blockchain and Cryptocurrency for Business if you’re not already familiar with the relevance of this technology.
Electronic invoicing, or e-invoicing, is a topic which hardly needs introducing. As a pioneer in the e-invoicing market, we at Corcentric are hugely excited by the potential of combining this with blockchain technology.
Blockchain e-invoicing is where these two revolutionary technologies come together to redesign the invoicing and payments process. One of the benefits of using blockchain in the payment process is that an invoice can sit in a decentralised blockchain network and be accessed by several users at once. Any changes made to the invoice or associated information are permanently recorded, indicating who changed what and when.
This secure and easy access, combined with transparent and indelible recording of changes, removes the need for an intermediary to validate and verify changes. The upshot of this is electronic invoices can be shared via a blockchain and payment status can simply be recorded against them. This removes the need to process and transfer the invoice through layers of connected systems or authenticating parties.
Blockchain e-invoicing changes the dynamic of the whole invoicing process. The invoice remains static, on the decentralised blockchain, whilst various systems access and modify this (to indicate payment status). The tamper-proof and verifiable nature of transaction records on a blockchain brings an unprecedented level of trust to the payment process. In return, this provides confidence to process payments more swiftly – improving cash flow and opening up opportunities, such as dynamic discounting for faster payments.
Blockchain-based electronic invoices – a real world example
China made history on 18th March 2019 with the first-ever rail transit invoice to be issued via blockchain. This historic moment occurred at Futian Metro Station in Shenzhen. This was the first of an estimated 170,000 similar blockchain e-invoices to be issued every day!
Each passenger scans a QR code at the beginning and end of their ride. This information is then recorded and used to generate an invoice. This invoice is then issued and stored on the blockchain associated with the popular WeChat mobile app.
A full history of invoices and payments made is preserved and made accessible to users. The main drivers for this initiative have been cited as the cost and environmental benefits of reducing the 170,000 invoices previously printed each day.
Who needs blockchain e-invoicing?
Automated trust, afforded by the consensus validation of blockchain transactions, has massive implications for business. Blockchain e-invoicing processes have the potential to shrink the purchase-to-pay cycle to near real time in some instances. Aligned with just-in-time production processes, streamlined warehousing and agile supply chains, the resulting efficiency gains could be enormous.
Businesses may choose to apply these gains to enhance their margins, price more competitively, or operate in a more agile manner. One thing is for certain, blockchain e-invoicing will become a disruptive technology for competitive advantage.
E-invoicing first, blockchain follows second
For many businesses, the first step towards embracing blockchain e-invoicing is to embrace e-invoicing. You can experience dramatic benefits, quite rapidly, after deploying e-invoicing. This paves the way for extending invoicing processes to include blockchain e-invoicing in the future.
If you’re not already familiar with the range of benefits electronic invoicing brings, take a look at our e-invoicing page for more information.
Blockchain technologies are still relatively young. For this reason, we don’t expect many businesses to embrace blockchain e-invoicing for a few years yet. At Corcentric, we are here to advise on and integrate the most appropriate blockchain e-invoicing functions when the time is right for your business.
We believe the best invoicing and payment processes are open networks, where the broadest range of invoicing formats and value-added networks (VANs) can be connected to with ease. Corcentric EIPP offers exactly this degree of freedom and interoperability, extending to work with a range of blockchain networks as they arise.
Getting ready for blockchain e-invoicing
The best way to get your business ready for blockchain e-invoicing is to embrace e-invoicing today. Look at our e-invoicing eBook for a deeper understanding of the benefits. Or perhaps, if you’re already looking to roll out e-invoicing, take a look at our guide to writing an e-invoicing business case.
If you’re really keen on evaluating the benefits of blockchain e-invoicing, get in touch and we would be happy to talk to you about opportunities for your business to benefit from both e-invoicing and blockchain e-invoicing when the time is right.