Indian Blockchain startup aims at automating multi-billion dollar invoice processing market

90% invoices are processed manually, it takes about 15-30 days average processing time, 57% invoices are paid late affecting cash flows, $11-$15 average money spent in processing each invoices. An Indian startup, {Param}.network is looking to solve this issue by using blockchain and semantic web technology. Vaideeswaran Sethuraman, CEO & Founder of {param}. Network, shares his perspective on the big opportunity on automating manual invoices.

Some edited excerpts from the interview:

What are some of the issues with respect to manual invoicing for enterprises specifically from an Indian context?
Manual invoicing is an issue that is plaguing global economies and not only India. In fact, currently 90 percent of the invoices are handled manually. In 2019, over 550 billion invoices have been estimated to be generated worldwide with the average amount spent on every invoice varying from $11 – $15 per invoice.Invoice processing is not only multi-organizational but also includes an array of other departments’ invoicing, such as purchasing, accounts to others’ marketing, operations and more.

Traditional invoicing involves multiple steps before the actual payment is made. Below are some of the most pertinent issues with respect to manual invoicing today:

1. It’s a costly affair– As mentioned above, an average invoice costs between $11- $15 to process. Invoices with special conditions like exception and non- PO invoices can cost up to $50 to process a single invoice. Organizations bleed because of such mismanagements of processes that can be automated.

2. Increasing complexity – Large enterprises process about 90 percent of their invoices manually. This increases the opportunity for the situation to turn complex when these enterprises have toengage with third party organizations for various functions. A large enterprise may get invoices from 30 different partners or vendors making it difficult to manage

3. It’s time- consuming- With manual invoicing, companies can take up to days or even weeks to approve an invoice. This not only makes the process longer, but further increases cost of operations for a business as they’ll have to pay more people for longer working hours.

4. It tends to make you lose money– Issues like duplicate payments, delayed payments, fraud, late payment fees and forgotten credit notes, are very common in manual invoicing. This can make a business lose more money and thus increase overheads for a company.

5. Prone to human error– As a tedious and monotonous task, errors are inevitable in manual processing

6. Trust deficit– Verification of invoices can also become a tedious task. If there was a purchase order created during procurement, the invoice must then be matched against the purchase order to confirm that the amount that is being paid is correctly stated on the invoice. While this procedure is in place to help protect against fraud and unauthorized transactions, mishaps still occur due to the sheer volume of invoices that need to be verified

How can Blockchain help in resolving these issues?
Since invoice processing requires multiple parties, there is no automated authentication for checks and balances. Most of the existing Enterprise Resource Planning (ERP) systemsare deployed for inter-departmental requirements. The invoice processing by most of these companies are done through emails, by scanning each invoice either manually or through RPA to fit their SaaS mechanism. Apart from the fact that this is costly and time-consuming process, the real question here is that how can one trust invoices coming through several channels? There is a trust deficit which isn’t addressed today, and this is where {param}. network comes into play.

Since all invoices are on an immutable ledger, records cannot be deleted or altered, if any record is altered, all parties on the blockchain are alerted. Every node on the network is equipped with two databases, a public and private one. The public database shares only a hash while the private database contains the invoice. The hash is circulated across multiple parties on the chain, for everyone to witness the transaction and the invoice transfer occurs only peer-to-peer.A separate connection is created for the private database exchange, which is based on the Secure Token Transfer Protocol (STTP). Besides these, our technology brings other advantages, for instance it eliminates the use of paper and allows sharing of invoices electronically on a real time basis with a digital signature.

On{param}. network, we capture invoices along with supporting documents, which acts as evidence to ensure traceability in the invoicing process.  More importantly {param}. network also aims to help auditors, as the platform enables the creations of an audit trail, which ensures there is no link broken in the entire process. Above all, our platform can bring down the cost of handling the entire process of invoicing to around $3-$4.

Simply put, imagine the convenience of WhatsApp and the experience of an Enterprise Resource Planning (ERP). All one must do is download, install, add contacts and share invoices instantly. {param}. network is a light-node software, where businesses can share quotations, purchase orders, invoices and confirm payments instantly over the blockchain. Think of our platform as a ZoomCall or Magic Link for e-invoice generation and sharing. Customer onboarding happens very swiftly, just a link is shared among all members of the platform and they’re onboarded.

How is Param network looking at addressing this market? What is the market opportunity?
We are looking at large enterprises as anchor customers where enterprises to SMB volume of transactions use cases are higher and our initial customers are around this domain. Currently we have four MNCs using the platform. These were our initial BETA customers who have now moved permanently on our platform. With the government’s push towards GST e-invoicing our platform is now integrated with GST e-invoicing solution as well.
The addressable market for this is large enterprises exchanging volumes of invoices with SMBs. Around the world, there are over 200 million enterprises, over $400 trillion worth of commerce is conducted and 500 billion invoices are generated globally. Even if someone taps just 1% of this and charges about a dollar for each invoice processed, you can see that the market opportunity is huge.

Number of clients using your Blockchain solution? Can you help us with some use cases of your clients who have benefited from using your solution?
Our focus is on expanding into as many sectors as possible and creating awareness of blockchain backed e-invoicing processes. We are in our growth phase and currently, we have four customers including, an automobile company, a Fintech, a travel firm and a BPO organization. We are seeing a lot of interest in our offering as more organizations are realizing that e- invoicing is the future.

We worked with a company that had issues with their Logistics Services Providers (LSP). The company’s invoices by their LSP were not raised on time, which resulted in delayed processing of these invoices. Many a times, invoices were not matching with the contract rates. The company also complained about how there was a lag in real-time visibility of shipment as their LSP took up to two weeks to upload copies of the Lorry Receipts/ Proof of Delivery (PoD). This in turn affected the productivity of their finance team, as they had to coordinate withmany stakeholders (Logistics, Warehouse, LSP etc.) to verify the authenticity of the invoices. Since the company worked with hundreds of LSP vendors, reconciliation with these vendors became a painful task.
{param}. network helped the company to capture all the missing data points (i.e. contract details, transportation order issued by the logistics team, vendors’ trip sheet (LR), good receipt note (GRN) along with digital signature of the receiver).

Now when the LSP raises an invoice, automatically all the documents are linked and a smart contract on the blockchain can verify the authenticity of the invoice and proof of delivery, which eliminates a lengthy invoice verification process by finance team. The outcome from our solution is that we have enabled the company’s LSP to raise invoices as soon as it delivers the goods. Earlier the LSP would take 15 days to upload invoice, now, it is done instantly within a day. We have eliminated the process of issuing credit notes to the LSP by the customer, as the system automatically calculates the value of the invoice on the customer’s behalf, which essentially saves a lot time for the company. Once the invoice is received, it is machine-approved and forwarded to account payables, eliminating the need for human intervention. With this, we have increased the productivity of the company’s finance team from roughly 500 to 5000+ invoices per month, which means we’ve roughly brought down the cost of processing an invoice from Rs. 275 to Rs. 80. Now, imagine an enterprise who deals with 10,000 invoice per month. We can potentially save Rs. 2.3 Cr per annum for the enterprise.