We are excited to welcome Peter to the Globys team! Here are a few thoughts from Peter as he begins his journey at Globys.
Why am I taking on invoicing?
I’ve been writing for several years about how Blockchain will fundamentally transform business transactions. I’ve been privileged in my career to help lead the automation of several fundamental business processes: banking in the late 90s (when the Internet was new) at Microsoft and Corillian, expense reporting at Concur, and more recently I’ve focused on automating sales tax and transactional taxes at Avalara. In each industry, replacing burdensome manual processes with automation has helped people eliminate drudgery from their professional lives and better focus on adding real value to their business. The result has been the unlocking of massive economic value.
Invoices Are Next
When I look at what area is next up to be disrupted by automation, it’s clear that invoicing is next. Today, 92% of all invoices are sent as a PDF in email. This is a giant waste: buried inside that unstructured document invoice are important details like amount due, date due, remittance information, and so on. At most companies, that PDF or paper invoice is still opened by a human and hand-keyed into their accounting package. In 2018!
The rest of the existing workflow around invoices, from purchase orders to sending payments to remittance to audits, is just as inefficient — characterized by emails, phone calls, and other wasteful manual interactions.
Business People’s Tools for Working Together Desperately Need an Upgrade
If two businesses want to work together, their tools for doing so are stunningly antiquated. While EDI promised automation and has existed for more than 30 years, it has failed to reach meaningful adoption outside of a few industries, and consequently most businesses are sentenced to sending PDFs back and forth in email. Some businesses have tried to automate by exposing an invoicing web portal and forcing their trading partners to manually type in each invoice by hand – but that just shifts the manual burden from one company to another. This isn’t scalable.
From an engineering point of view, there are two separate loosely coupled organizations, each with their own data store running on different stacks (say one uses Netsuite, the other Quickbooks). Today, synchronization of these stores happens through manual entry in each system over protocols called email or the telephone. What we need is real-time, automated, permissioned synchronization between these stores.
What we need is a shared ledger between trading partners. A place that two businesses can place information they want to share: contracts, purchase orders, invoices, statements, and so on. This ledger needs to be entirely electronic and computer-readable. It needs to work with a variety of accounting systems, so that no matter what software each of us are using, we can easily collaborate with other businesses. Blockchain gives us a great way to do this – but someone needs to make it usable. This is why I joined Globys.
There’s a lot of work to do to build it. Our industry needs to define better format standards and APIs for invoices. We need to settle on a Blockchain model for keeping sensitive data private while embracing the auditability benefits of permissioned sharing of the ledger. We need better onramps/offramps between Blockchain and the traditional banking system to make fast electronic payments. And much more. These will be fun problems to work on.
Focusing on The Inevitable
Ask these questions:
- In 10 years, will invoices still be sent as a PDF inside of an email?
- In 10 years, will the primary method of synchronizing two accounting systems be to have people hand-key the information from one to another?
- In 10 years, will the means for implementing simple purchases or contracts between two companies be to negotiate it on paper, then have a bunch of accounting clerks manually enter all transactions on both sides?
- In 10 years, will payments for invoices be made by paper checks?
I strongly believe the answer to all these is “no.” At Globys, we’ll be focused on building for that future. I can’t wait to get started.