Top five reasons why blockchain technology compliments e-invoicing
The current pandemic has brought to fore the significance of digitalization to fast track the accounts receivables process in these uncertain times. E-invoicing is one way to accelerate delivery of invoices and collection of payments. However, since invoicing is an activity that consists of multiple parties (customers, vendors, suppliers etc.), it is susceptible to delays, errors and frauds. Ensuring digital trust will be fundamental in the post-COVID era, and Blockchain fits the bill. Blockchain brings a unique level of trust in the payment process, allowing government and businesses to process payments in a swift and secure manner. This listicle encapsulates the top five reasons why blockchain technology is best suited for modern e-invoicing solutions-
An immutable ledger-
Blockchain comes to the rescue to solve the trust deficit in invoicing,
as the original encapsulated block can never get deleted. It is the
perfect fit for multi-party collaboration. This
decentralized blockchain system will effectively streamline the
adoption of e-invoicing by registered GST businesses, without hindering
the automation aspect.
Deterrent to fake invoices-
Implementing a blockchain-based platform would eradicate the
possibility of raising fake invoices as the access to the platform is
highly secured. Every single node (third-party)
has got two databases—a public database and a private database. The
public database shares only a hash and the private database which
contains the invoice. While the hash is circulated across the nodes for
visibility of transaction, the invoice transfer occurs
only from peer-to-peer. A separate connection is created for the
private database exchange based on the Secure Token Transfer Protocol
(STTP) mechanism, which prohibits fake invoicing.
- Verification made easy & secure- Traditionally, verification of invoices has been cumbersome due to multiple approvals needed by various departments in an organization. Integrating blockchain technology within e-invoicing can accelerate the verification of invoices as all third parties are present on the platform and are notified when an invoice is raised in real-time. These e-invoices are shared with a unique unforgeable digital signature on the document to verify the sender’s identity.
Typically a blockchain based e-invoicing solution uses voting-based
consensus mechanisms. With such mechanism, transactions are almost
instantaneous to match today's typical fast-paced commerce
- Seamless ERP integration- e-invoices are generated by large number of businesses even today. However, they all use the format as provided by the ERP or billing software they use. Lack of standards leads to a scenario where an e-invoice generated on one billing software can’t be read by another, requiring manual data entry from electronically generated invoice. However, a blockchain based e-invoicing platform, can today come with reference document convertors and API that can be easily be customized and integrated in major ERP and EDI software. Blockchain additionally enhances the interoperability between the e-waybill and e-ticket systems while reducing dependency on IT infrastructure to simplify participation.
Blockchain can be pivotal in ironing out glitches and improving the efficiency of India’s GST e-invoicing network as it holds great potential in verifying transactions, making it the perfect catalyst for revamping e-invoicing for the post-COVID era. With implementation of blockchain technology, the invoice data can not only be compliant, but democratized. At the end of the day, it all boils down to the need for an all-inclusive, user-friendly, and secure system capable of eradicating fraud. With blockchain in our grasp, an impregnable future of e-invoicing is closer than we think.