There’s a school of thought that runs along the lines of – when the economy picks up, some of the alternative funding methods that have flowered in the wake of the recession, will cease to be the flavour of the month that they seem to be right now. The theory being that if interest rates increase, the benefits to be gained from greasing the wheel of the supply chain by paying early at a discount, will be outweighed by the benefits of keeping the money in the bank. Undoubtedly that will be the case for some organisations, just as now there are many who are yet to be convinced by the merits of being able to use supply chain finance or dynamic discounting even in today’s market. Sometimes in business old habits die hard.
But interest rates are unlikely to rise by much in the short term, and while better access to funding is the overriding reason organisations implement a supply chain finance strategy as part of a P2P solution, that’s not where the benefits end. In a recent conversation with Esa Tihilä, CEO Basware, he talked about the company’s recent partnership with MasterCard which he describes as being able to deliver transformational commercial benefits to business.
For example, by gaining better control over the visibility and timing of their invoices, companies are better able to manage spend under management. The power lies with the buying organisation to plan how and when they pay - and with the supplier, how, when and if they accept discounts and when they can receive payments.
Including the ability to leverage strategic discounts and payment terms into a comprehensive P2P solution is another step towards removing the layers of manual processing which have dominated and slowed down the industry for years. And as Esa says – the more manual a process is, the easier it is for errors to creep into the system, turning what could be a straight through process into a step driven, inefficient one.
And as Esa explained further, that’s a situation which has been exacerbated, in terms of processing efficiency and better access to cash, by an inequality in the system. Invoice financing has always been available, but only for the higher value invoices. What the partnership with MasterCard means is the creation of a more level playing field for all organisations including SMEs - and with Basware compliant across more than 50 countries, and MasterCard covering more than 150 currencies in 210 countries - the opportunity for faster processing on a global scale.
On top of that, over the last year or so Basware has been through a process of building on its core solutions, such as the strategic alliance with BravoSolution, shoring up the front end of the transaction process. The company aims to provide organisations with a solution which is also strong at the start of the process with the view that fewer errors at the beginning will mean fewer at the end, creating an easier to use, faster transaction process as a result.
And “easier to use” is now the holy grail of B2B commerce. Much is often made of the need for B2B commerce to mirror what’s going on in the B2C world, where business takes place seamlessly across a network, like Amazon or Facebook. And although the B2B environment is always going to be more complex and compliance led - plug the right solutions into the process and much of that complexity can be managed and in a fully compliant way. Yes, the internal processes need to be right in order for that to happen, but B2B commerce can be powered by the interconnected strength of our networks, conducted over an increasingly open platform – made easy by the use of intelligent dashboards.
Add to that the power of analytics, and new windows and opportunities start to open up. For a long time the challenge was how to make the different elements of the purchase to pay process more visible, but with something like Basware Analytics, for example – organisations have unparalleled visibility of spend, ability to understand their suppliers better and as Esa says – that visibility provides more accurate steering for the organisation. What we take for granted in our personal lives, is still underdeveloped in business, and electronic document exchange is the key to making it happen. There are still too many manual stages which inhibit end –to-end processing, but with the benefits driving e-invoicing becoming increasingly compelling, and a growth in organisations developing positions such as Global Process Owners, or Heads of P2P overseeing the whole transaction, the next 3 – 5 years are likely to see enormous and business changing advances in this area.