Keywords: einvoicing, tradeshift, electronic invoicing, NHS, Dell, French government

Could e-invoicing change the banking industry forever?

Ivan Ujvari | News | 31 May 2012

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The future of the banking industry could change from the one we know today because of the increasing adoption of e-invoicing.

As more organisations move to automated payment processes, fewer will seek out small business loans and this could drastically change the banking industry.

This is the prediction of Fast Company, which suggested that instant payments from e-invoicing vendor Tradeshift is one such service which could disrupt the global banking sector.

Suppliers receive immediate payment through the system once their customer accepts an invoice, thereby reducing the time it takes to process an invoice. While paper invoices can take at least 30 days to process, businesses now have instant payment.

The news provider stated that this benefits small and medium-sized suppliers as they are often hit with higher interest rates because they are thought of as riskier bets. By accepting the invoice straight away, however, the risk is reduced.

It is this real-time system that will have a wider effect on the banking industry and the technology is also being used by the vendor to collate useful data for businesses.

"You cannot even begin to imagine what big data will do to finance," Christian Lanng, Chief Executive Officer and Co-founder of Tradeshift, told Fast Company.

"As we get more data on transactions, that changes the whole credit picture."

Illustrating the dramatic increase of uptake of e-invoicing, the company now has 100,000 businesses using the service in 190 countries, with large public organisations including the NHS and French government as well as multinational private firms like Dell.

Around 2,000 new companies join every week, a significant rise from 1,000-1,500 per week that were signing up at the start of the year.

It means that the company facilitates "millions" of invoices every year, just from Fortune 500 companies alone.

e-invoicing helps businesses cut their costs per invoice, eliminates cases of late payments and speeds up payment processes. It can also diminish the need for suppliers to take out a business loan if they are paid promptly.