Companies are slowly adopting blockchain for invoice workflows as they are realizing its benefits and the ease of implementation.
Fremont, CA: Blockchain technology has all the qualities to improve the reliability of invoice workflows. It can transform how transactions are validated, invoices issued, and payments are made. The distributed ledgers, based on blocks, record a transaction and are a perfect fit with payment reconciliation. All records are protected by cryptography, where the transactions are visible to all the respective parties making intermediaries completely irrelevant. Also, the technology facilitates the exchange of digital assets without duplication.
The current electronic invoicing solutions have two significant drawbacks. First, they are limited to B2B/B2G, and second, they are accounting-centered. Additionally, bank reconciliation is a complicated and expensive task, especially in the Fintechsector, mobile payment facilities and open banking. The blockchain will soon remove the historical separation of financial transactions and their documentation. Blockchains such as Ethereum can accommodate programmable smart contracts that can typically transact token, such as currencies which is permanently recorded on the blockchain.
Blockchains combine money transfers and documentation accessibility forming a ledger that is reshaping the finance sector. In the same ledger, the user can record the payment that the client made and the details of the transaction. On the plus side, blockchains provide a very high level of security. Blockchain-based invoicing eliminates the need for lengthy audits and approbation processes to recruit new infrastructure. Blockchain technology fused with open-source software allows the improvement of functionalities and user experience by new entrants without competing against the network effect of existing actors.
When invoices do not change overtime, they become a reliable source of truth, and by adding a few standards, they become interoperable. In the near future, companies will be able to share financial data with partners. As risky it may sound, companies will not share everything. For instance, when a company sends copies of the invoices along with some other information, it triggers valuable services. Despite all the benefits, current blockchains cannot share millions of invoices per second. Furthermore, the open new banking domain makes it difficult for the banking sector to propose the delegation of power such as the initiation of transactions. However, blockchain technology is evolving very fast, and innovation can be done one step at a time.