There was a time when we used to ask for “the original” invoice. It was a time when the fax machine was one of the most advanced pieces of technology in our offices. And most importantly, emails were still seen with diffidence. Rightly so I would add with hind sight... At the end of the day, we are all still receiving the usual scam email promising us a 7 digits inheritance from a Prince far away. But recently there has been a well needed shift towards trusting digital records, and in the past few years it has seen a drastic acceleration.
For a SME, whether the invoice is sent by email, WhatsApp, or even scribbled on a piece of paper, might not make too much difference. But for multi-million-dollar transactions, keeping track of the documentation rigorously, is a must. To a casual reader this might seem obvious, and probably the main reasons listed as why are we collecting and keeping digital records would point to accounting only. However, under the hood, the digitalisation of business processes - especially in trade finance - has surprising ramifications that might benefit business in much more significant ways.
When commenting about the timing for digitisation and digitalisation, Edward Senju, Regional CEO of Sansan, a Japanese technology unicorn that aims to digitise Southeast Asia's 5,000 tonnes of paper invoices, said: “While the concept of e-invoicing has been talked about for years, its actual implementation in day-to-day life (...) is only just getting started in the aftermath of Covid.”
An important differentiation is to clarify that digitisation and digitalisation have a slightly different meaning. Let us start from digitisation. If I had an invoice created on my computer, and instead of printing it I sent it over to my client by email, that would be considered the digitisation of a task. On the other hand, if a firm has a complex process that starts from their supplier, goes through inventory and logistics, and ends with their client’s payment, that entire pipeline is the digitalisation. So the digitisation of all elements creates digitalisation as a whole.
Back to the not so intuitive advantages of digitalisation, one of the most important aspects is the drastic reduction - or even exclusion - of human possible errors. Every time a human is involved in a process, opens up the door for mistakes. A tiny error, such a misplaced dot in a figure, can generate enormous damage. Therefore, digitalisation aims to reduce to the bare minimum the need to manual input of data, and to remove completely the need of entering the same data manually more than once.
According to André Casterman, Founder and Managing Director of Casterman Advisory and a world leading expert in Digital Assets, Trade Finance, and Payments: "Digital processes across financial services enable increased automation of repetitive tasks, and deliver new visibility thanks to real-time analytics. Going digital is therefore crucial to support business transformation and such is now demonstrated across most industries and businesses.”
In fact, digitalisation should not be seen as a way to store the past only, but also to predict the future. With machine learning and artificial intelligence penetrating every aspect of business, the more data we feed the algorithms, the more accurate would be the prediction.
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