Latest News: Technology |  Celebrity |  Movies |  Apple |  Cars |  Business |  Sports |  TV Shows |  Geek

Trending

Filed under: News

 

Goodbye To Paper Invoices -- Basware Makes E-Commerce Electronic

Dec 20 2013, 9:46am CST | by

10 Updates
Goodbye To Paper Invoices -- Basware Makes E-Commerce Electronic
Photo Credit: Forbes
 
 

Comments

Recommend Your Tweet as Top Tweet:

Full Story

Goodbye To Paper Invoices -- Basware Makes E-Commerce Electronic

Basware provides a cloud-based link to allow companies and their suppliers to create invoices and exchange billing, approval and payment information without proprietary systems at either company.

“It’s a way for payments to happen without using checks,” said Esa Tihilä, CEO of Basware, a Helsinki-based company that provides electronic invoicing. “It saves time and money on both sides.”

The supplier sends an invoice and the buyer can approve it immediately and then pay at a specified time. Basware counts about 900,000 organizations as customers and has an inexpensive marketing approach — when one of its existing customers like KLM, Siemens or a car manufacturer — tells suppliers it wants electronic invoicing through Basware, the supplier is apt to sign up. Both sides win because Basware streamlines invoice processing.

“We are talking to the buying organizations,” explained Tihilä. “They tell us they have these 70,000 suppliers. Then we contact those suppliers and say that Daimler is keen on getting electronic invoices. Then we tell the suppliers, once they have succeeded with our electronic invoicing, that here is a list of other organizations that can receive your invoices electronically as well. We start with the buyers and then go to the suppliers.”

MasterCard has recently signed a partnership with Basware to provide financing based on the invoices. Once a buyer approves an invoice, MasterCard will finance the bill and pay it in real-time through the MasterCard network, beginning sometime in Q1 2014.  The average time for paying a business to business invoice is 55 days, said Tihilä. If the buyer wants to prolong the payment, the seller can get financing through MasterCard. The system is highly automated, reducing the overhead common in factoring of receivables, which is rarely done for amounts under $10 million, he added.

“With this system and MasterCard, we are able to offer very attractive interest rates for the service. It is highly automated and can be used for all invoices, from small to large.” Interest rates will vary, he added, but are very competitive.

“To be successful you need volume,” Tihilä added. “With MasterCard we can offer the same solution worldwide. We are the global electronic invoicing service provider in 110 countries. MasterCard is global so we can offer the same solution across the world.”

As many large corporations delay payments to suppliers stretching out well beyond 30 days to 60, 90 or even 120, electronic invoicing firms, B2B payments and financial companies like MasterCard are stepping into the payment gap, largely bypassing banks.

It may seem counter-intuitive that at a time when interest rates are near zero, large corporations would be trying to hoard their cash at the expense of their suppliers, but they are.

“Companies that are buying are trying to figure out how to improve their cash positions,” Tihilä. “This can severely impact the supplying company that needs the money.” Tihilä, chair of European e-invoicing providers, said that only the UK requires companies to pay their suppliers within 30 days.

Enrico Camerinelli, senior analyst at Aité Group’s wholesale banking practice, said that the first response of large companies in the financial crisis was to push back payments.

“Now, at least in some companies, the big effect of the crisis is slowing down, but they still have a tendency to improve their own working capital by delaying payments.” Buyers will sometimes offer to pay on presentation of the invoice for a two percent discount.

“If you add that up, it becomes double digit interest rate on an annual basis,” he added.

Whether MasterCard will provide a credible solution remains to be seen.

MasterCard will have to learn to be more flexible than it is with credit card customers, said Camerinelli, who expects the payments company is learning about the SME business from Basware.

“Credit card players have a good chance to play a role in SME finance if they become more flexible and learn to work with these mid-sized companies that do not have sophisticated accounts payable and accounts receivable systems. And they will have to rethink their pricing.”/>/>

More than a few efforts in B2B financing have launched and faded, he added.

Visa and US Bank formed a joint venture called Syncada to provide “integrated invoice processing, payment and financing platform for financial institutions to offer to their corporate and government commercial clients around the world.” Visa left the arrangement. Citi tried to partner with Ariba, since acquired by SAP and JPMorgan had a go with a company called XIGN.

None was a success, he said.

“The point is that banks are too inflexible.”

Tihilä said this combination of electronic invoicing and MasterCard financing could be a boon to cash-strapped suppliers. Some big buying firms have realized that by withholding payments, or pressing their margins too hard, they risk driving important suppliers out of business.

“There are examples where the big buying organization has put their contractors on their knees, and they go bankrupt and the big buyer is in trouble. (See my story on Zurich Re and supply chains) We are decoupling this. If you as a big buyer approve the invoice, then we are able to finance it regardless of your payment capabilities, and that is helping the smaller organizations or suppliers.”

The question will be how much MasterCard charges for that financing and whether Basware will link to any other financing providers, whether banks or perhaps nontraditional players like hedge funds or pension funds.

The European Commission has said that more than half the European economy depends on small businesses, and small businesses are having cash flow problems all the time. Now if a P&G pushes payment out to 75 days, a small supplier can use Basware and MasterCard to get 98 percent of the invoice in real-time, and then MasterCard collects from P&G.

Basware must be doing something right; Tihilä said the company in Q3 grew 70 percent from revenues the year before. With electronic invoicing now at just 10 percent of the market, he sees great growth potential.

“It takes some time for people to get it, and then everyone wants to have it,” he said.

Robert Cohen, marketing manager at Basware, said that it operates as an open network which any industry segment can use, unlike some that are specific to chemicals or autos.

“We have relations with 160 e-invoicing providers and we connect will all kinds of ERP systems,” he added. “If your ERP can generate any sensible data format, we can capture it and send it to the receiver.” This makes it different from EDI, an earlier electronic invoicing system, that required one-off connections between a supplier and a buyer.

Basware’s main competitor is paper, which is slow and expensive to precess. In Basware’s home country of Finland, 70 percent of all companies are connected to the network, the highest penetration in the world. But then the Scandis are famed for being leaders in electronics and mobile…in finance cash is rapidly receding from the economy.

“Basware is a way for payments to happen without using checks,” said Cohen. “The whole arrangement connecting Basware with MasterCard opens new doors. “

“This will spur growth,” agreed Tihilä.

Source: Forbes

 

You Might Also Like

Updates


Sponsored Update

Update: 10

MRCB, Nusa Gapurna and PKNS settle suit over RM3 billion PJ Sentral project

Source: Malaysia Today

(The Malaysian Insider) – Malaysian Resources Corp Bhd (MRCB), Nusa Gapurna Development Sdn Bhd (NGD) and PKNS Holdings Sdn Bhd have reached an out-of-court settlement over the owners ...
Source: Malaysia Today   Full article at: Malaysia Today Jun 21 2014, 2:53am CDT
 


Advertisement


Update: 9

Story behind Syed Mokhtar’s ‘RM2.25 billion tax-exempt’ Bernas deal revealed, says PKR MP

Source: Malaysia Today

(The Malaysian Insider) – An innocuous written reply in Parliament has provided a peek into the cosy relationship between the Najib administration and Malaysia’s best-known businessm ...
Source: Malaysia Today   Full article at: Malaysia Today Jun 15 2014, 12:56pm CDT
 

More From the Web

Update: 8

Constitutional monarchy still murky concept

Source: Malaysia Today

After the RM4.5 billion land sale, the Sultan of Johor secured a 15% stake in MOL Access Portal (MOL) for RM396 million and took a 20% stake in Berjaya ...
Source: Malaysia Today   Full article at: Malaysia Today Jun 14 2014, 12:37am CDT
 

Update: 7

Sultan of Johor’s RM4.5 bil backlash?

Source: Malaysia Today

49th Karlovy Vary International Film Festival
Has Sultan Ibrahim of Johor’s succession of big money deals over the last six months caused the tide of public opinion to turn against Johor’s royal palace ...
Source: Malaysia Today   Full article at: Malaysia Today Jun 11 2014, 8:49am CDT
 

Update: 6

Putrajaya denies carpet dealer given interest-free loan

Source: Malaysia Today

Eileen Ng, The Malaysian Insider Putrajaya today refuted allegations that Bank Rakyat had allowed carpet dealer Deepak Jaikishan to repay a RM32 million loan without interest following intervention from a. ...
Source: Malaysia Today   Full article at: Malaysia Today Jun 11 2014, 5:44am CDT
 

Update: 5

Malaysia Spends Over $9 million on MH370 Hunt: Report

Source: NDTV

49th Karlovy Vary International Film Festival
Malaysia has so far spent about RM27.6 million (over $9 million) on search operations for missing Malaysia Airlines flight MH370, an official said ...
Source: NDTV   Full article at: NDTV Jun 9 2014, 3:12am CDT
 

Update: 4

Bill for Kidex likely to soar to RM3.4b

Source: Malaysia Today

The original RM2.4 billion tag on the proposed highway did not take into account the cost of acquiring the land mostly in the urban areas, claims an assemblywoman Fabian Co ...
Source: Malaysia Today   Full article at: Malaysia Today Jun 9 2014, 2:51am CDT
 

Update: 3

MACC: No elements of graft in Bank Rakyat’s loan to businessman

Source: Malaysia Today

BET AWARDS '14 - Red Carpet
(Bernama) – The Malaysian Anti-Corruption Commission (MACC) found no elements of corruption in Bank Rakyat’s RM32 million interest free loan to a businessman. MACC in a statement today said initial... READ ...
Source: Malaysia Today   Full article at: Malaysia Today May 31 2014, 9:33am CDT
 

Update: 2

IHH Healthcare posts 25% rise in 1Q earnings to $62 mil

Source: The Edge Singapore

IHH Healthcare Berhad announced that revenue grew by 8% y-o-y to RM1.8 billion ($703 million) for 1Q2014 ended March, as earnings grew 25% YoY to RM159.1 million. ...
Source: The Edge Singapore   Full article at: The Edge Singapore May 29 2014, 11:29am CDT
 

Update: 1

Hasan Malek evades media over RM32 million Bank Rakyat loan scandal

Source: Malaysia Today

Elizabeth Zachariah, The Malaysian Insider The minister embroiled in the RM32 million Bank Rakyat loan scandal refused to take questions from the press today at an event in Ku ...
Source: Malaysia Today   Full article at: Malaysia Today May 28 2014, 11:42pm CDT
 

Shopping Deals

 
 
 

<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

Comments

blog comments powered by Disqus

Latest stories

Analyst Ming-Chi Kuo&#039;s take on the Apple iWatch
Analyst Ming-Chi Kuo's take on the Apple iWatch
Apple’s sapphire-covered ‘iWatch’ to enter mass production in November
 
 
Nokia Lumia 930 now available in the US for $699.99
Nokia Lumia 930 now available in the US for $699.99
The first third party retailer to sell the phone in the US is Expansys
 
 
iPhone 6 Sapphire Glass Display Gets Run Over By A Car
iPhone 6 Sapphire Glass Display Gets Run Over By A Car
After sailing through 'key and knife' and 'hammer and nail' test, the front of the iPhone 6 finally gave way to the weight of the car
 
 
Axelle Despiegelaere Model Contract Terminated
Axelle Despiegelaere Model Contract Terminated
The cute Belgian Soccer fan that scored a modeling contract after her photo went viral. Now the contract has been terminated - likely because of the Safari hunting photo. Her Facebook page is also gone.