Author: Pete Loughlin

I often recall the image of the Dickensian bookkeeper when I look at an AP department. In the 19th century, ledgers were hand written with quill and ink, sometimes in triplicate, which meant doing the same things, literally, again and again. Today, we still have pieces of paper to record the details of a business transaction. In an age when we can trade coffee, oil and pork bellies in the blink of an eye - in an age when even pre-school kids are computer literate - what place is there for paper?

In 2012, the supply chain finance debate became louder and more relevant to more businesses. It’s been described as the perfect storm – the combination of constrained liquidity and very low interest rates means that the gradient between the business “haves” and “have nots” has become steeper – and banks and investors love steep gradients. Supply chain finance is not new but new approaches are emerging based on new and innovative use of technology. In the past, the banks were the only players and they would only play with the big boys. For it to be profitable, the numbers had to be big and the cost of entry was high. But now, as collaborative supplier networks and the associated technology have matured more complex deals can be managed and the cost of entry has plummeted. Increasingly, businesses as well as individuals are turning not to the banks, but their peers for financial support.

One of the difficulties that analysts have is moderating their tendency, out of enthusiasm, to exaggerate the claims that vendors make. They want to report exciting things, things that people want to read. It’s all the more difficult because we all know that the vendors use marketing license in spades when they brief analysts. But the implications of the news announced today are difficult to exaggerate. Tradeshift have got a new investor. Intuit, the engine behind QuickBooks, the people that support 5 million small and mediums sized businesses in the USA, have partnered with Tradeshift. What does this mean? It means that Tradeshift’s network is now the biggest in the world.

Everyone agrees it seems. The case for implementing inbound e-invoicing is compelling. It is a simple matter of common sense. Replacing an inefficient paper process with an automated electronic process will generate savings and in the current economic environment, who would argue that it was not a good idea? It isn’t even that technically complex. What could possible go wrong?

The problem with public sector finance is they have it too easy. The challenges that face businesses in the real world don’t affect public sector. Apart from the annual scramble to spend money in order to secure next years budget, issues like cash flow management just don’t exist in the same sense that it exists in the private sector. And this is why it is so disappointing to see government bodies playing the late payment game. Why do they pay late? They don’t have a good reason to.

hmvpa_468x374Karl Meinke, professor at the Royal Institute of Technology in Stockholm once said - "Computers allow us to shrink the world. Before we know it, we'll all be living in matchboxes". I paraphrase slightly. He won't remember that he said it.  It was it circa 1975 when he was 13. I remember it was very funny at the time but remarkably, there's a ring of reality in what he said. The world we occupy today is unthinkably different to the world that existed then and while we don't live in matchboxes in a literal sense, who would have thought that the shops we used to frequent would have shrunk to the size of a letter box?