In a recent article, Barack Obama lauded the technological changes that occurred during his eight-year presidency. He said: “I still believe science and technology is the warp drive that accelerates… change for everybody. That’s one reason why I’m so optimistic about the future: the constant churn of scientific progress. Think about the changes we’ve seen just during my presidency. When I came into office, I broke new ground by pecking away at a BlackBerry. Today, I read my briefings on an iPad and explore national parks through a virtual-reality headset. Who knows what kind of changes are in store for our next president and the ones who follow?”
What has happened to Obama on a personal level has been reflected across the globe, as every individual, corporation and nation has been transformed by the digital revolution. As technology, mobility, information and e-commerce have become readily available, even the smallest of companies has gained the capability to do business on a global scale. Technology has been an enormous force for good, and now companies are no longer confined to operate within the contours of their home countries, or solely reliant on trade with neighbouring ones.
As a result, international trade is booming. A recent report by AliResearch showed global B2C cross-border e-commerce is expected to be worth $1trn by 2020 – a figure that looks even more exceptional when one considers it was only $230bn in 2014.
While our borderless world has thrown open the floodgates for trade, it has also presented businesses with various new challenges. Research by the Economist Intelligence Unit found the biggest pain point for companies around global trade was in relation to payments. Of the 500 companies surveyed worldwide, 32 percent cited making payments as a top challenge, pointing to issues arising from currency fluctuations, process inefficiency, limited payment visibility and bank fees.
In addition, ensuring invoices are compliant in different countries and are meeting the relevant legal requirements can be a big headache. Compliance is a moving target, as governments are constantly changing the rules and each country or region tends to have its own set of criteria.
The death of paper
It is clear that, against this backdrop, traditional paper-based systems that might have once served a business well nationally can no longer cope with the complexity of trading internationally. It is perverse that, while the digital revolution has touched upon the front end of most businesses, many companies have not incorporated new technology into their back office. Instead of adopting automation – which seems like a no-brainer in this digital age – too many companies are still relying on a manual system, rife with errors and inefficiencies that cause friction and delays in the payment process. Across Europe, this is resulting in around 40 percent of invoices being paid late or defaulted on, which is both unacceptable and totally avoidable in the digital world we live in.
While our borderless world has thrown open the floodgates for trade, it has also presented businesses with various new challenges
This is where Tungsten Network comes in. We are a team of technologists and digital evangelists dedicated to accelerating global trade through the intelligent use of data and the death of paper. We have built the world’s most trusted business transaction network, which is tax compliant in 47 countries. Using it can completely eliminate paper from the process of paying your suppliers, and increases the efficiency and accuracy of your accounts payable team. It enables complex buying organisations to connect with their global supply chain and have visibility of the current status of every single invoice in the system.
Encouragingly, e-invoicing is becoming the norm for many of the world’s largest brands – around 70 percent of FTSE 100 and Fortune 500 companies have already taken their procurement, invoicing and payment procedures on to Tungsten’s electronic network. This is timely, as a growing number of countries are moving towards recognising electronic invoices as legal documents, and even mandating their use over paper counterparts.
Currency conundrums
Another significant challenge of trading overseas is paying invoices in different currencies. Companies can easily become unstuck when valuable working capital is tied up in elongated payment processes and lost through unfavourable currency conversion rates. This is why we recently teamed up with international money transfer platform Payoneer to enable businesses to receive cross-border payments quickly, securely and at low cost, saving up to 90 percent on bank transfers. Through the Tungsten platform, businesses can now receive bank transfers from their international clients and customers as if they had a local bank account, meaning that if a client pays in dollars, a supplier in the eurozone will receive each payment in euros.
In addition to solving compliance and currency issues, businesses that use the Tungsten Network are also enjoying, at the touch of a button, unprecedented access to a wealth of data. Using innovative spend analytics technology, management teams can analyse their own invoice data, offering comparisons against past spending patterns, and often uncovering significant opportunities to make savings. The technology can also provide a useful insight into which suppliers they are spending the most money with and where duplications may be occurring. The potential to analyse large datasets is vast, and could transform the procurement industry within a few years.
While e-invoicing and the many associated benefits of digitalisation are evident, today’s technological landscape can also introduce new complexities and threats to a business, for example concerns about data security, cybercrime and invoice fraud.
Safe and sound
Guaranteeing data security and ensuring virtual attackers can’t exploit loopholes, break into servers, or steal sensitive financial information and funds is vital for all companies. This is why Tungsten Network advocates ISO 27001, an internationally recognised minimum standard on data security. This means businesses that transact through the network can be confident their data is safe and they haven’t been exposed to any additional risk by using the platform.
In addition, electronic invoicing can eliminate the possibility of invoice fraud, shifting the responsibility for checking an invoice from your finance team to a highly sophisticated, automated service provider. Only when our system validates all of the inputs and creates an invoice will the payment be made, spelling the end of the fraudulent duplicate. In addition to automated rules, the move to electronic systems also makes the invoicing process more efficient, which in turn makes it easier for your business to react to fraudulent activity once it is detected.
Tungsten is yet to fully realise all the possibilities its network can offer. It currently processes $200bn of invoices in 196 countries for more than 200 complex buyers, and this provides huge potential for new business and product development. As Obama asked, “who knows what kind of changes are in store” for businesses in the coming decade? However, what we know for certain is that we’re committed to being at the forefront of the industry, using innovative technology to revolutionise the way businesses across the world operate.