What is blockchain and how can it be applied to invoicing? And when will we see it become reality?
Blockchain technology is also being applied to electronic invoicing. And it has the potential to revolutionise how transactions are validated, invoices issued and payments made. Still best known as the building blocks of cryptocurrencies such as Bitcoin, these distributed ledgers based on blocks, each of which record a transaction, are a perfect fit with payment reconciliation. A document sits in a decentralised blockchain network, which can be accessed and altered – with a record of who made changes and when – by several users at once. It is tamper-proof and transparent. Each record or block is linked and secured using cryptography, with all transactions visible to all parties, therefore removing the need for an intermediary. Using an invoicing system on the blockchain will allow for seamless payments made automatically from the customer to a business’s digital wallet. Transactions are easy to track and monitor and the entire history of an exchange can be downloaded from the blockchain.
Increased visibility with blockchain
Traditional payment processes tend to be opaque, based on paper, with little or no audit trail available. Debtors can easily delay payment by hiding behind bureaucracy or claiming demands are held up or lost. Request Networks, TallySticks and Applied Blockchain are just some of the companies seeking to change all this by shaking up business invoicing using blockchain. They argue that the blockchain means information is accessible and accurate at each step, allowing the financial decision makers in businesses to see exactly how much money they’re owed and what’s on its way, making planning easier.
It all sounds quite utopian. In reality, uptake is likely to be fairly slow. When one considers how resistant many businesses have been to adopting existing electronic invoice and payment technologies, it may take time before the average company adopts blockchain technology to handle invoicing. But they should watch the progress of this new kid on the block – if you’ll forgive the pun. Blockchain certainly looks set to be integrated increasingly into business processes in the years to come.