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-
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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.
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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.
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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.
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Transaction speed-
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
requirements.
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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.
