Tradeshift Challenges Traditional Invoicing Platforms with Cloud-based, Social Network-like Solution
Three Danish e-business enthusiasts and former e-business pioneers working in the European Union and Danish government went on to establish the cloud start-up Tradeshift in 2009. The three were frustrated by expensive or inefficient invoicing solutions and lack of technological advancement in this field.
“Back then we asked simple questions like, why are the smallest businesses paying the most to send electronic business documents? Why do it cost them EUR 1-5 to send an electronic invoice? When you can get an ADSL connection and send 10.000 emails a month if you care. There were no good answers but one, because the existing business model was based on monopolies, big players locking the business into closed infrastructure and who had no interest in common standards. Why else would there be more than 5000 variations on EDIFACT standards?” Tradshift’s founders said in a company blog, trying to explain the driving force behind Tradeshift.
The company’s solution is an unusual mix of financial software and social network providing invoicing capabilities for different formats like PDF invoices or XML and EDIFACT documents. Moreover, it acts as a social network platform allowing large enterprises and small business owners to utilize the same network and invite all their suppliers and customers to join. At present, the Copenhagen-based companies serves businesses in over 100 countries, and was awarded as Best Business or Enterprise Start-up by the European Startup Awards (the Europas) in November, 2010.
You may be surprised to learn that the company offers unlimited fee-free transactions over an open-standards and Internet-based smart supply chain network. The service provides capabilities to distribute invoices globally while storing them in the cloud. Tradeshift’s system also shows the current status of an invoice; namely, pending, rejected, accepted or paid.
The Tradeshift Invoicing module allows customers to receive electronic invoices from all suppliers and issue electronic or pdf invoices to all customers. The service updates suppliers on the status of invoices automatically and validates invoices prior to issuing. It also features open API and standard connectors for SAP and Oracle.
The Purchase Orders module’s core functionality enables clients to create invoice from purchase orders and automatically matches purchase orders and invoices. Another module of the system is the Supply Chain Communication module, which eliminates unnecessary phone calls by creating in-document dialogues with suppliers, allowing comments and responses directly on invoices, purchase orders and other documents. The system stores all communication in one place and creates a signed log of all communications and processes connected to invoices, purchase orders and credit notes. The last module is called Master Data Subscription, which is able to automatically create suppliers’ and customers’ profiles in customer’s ERP system. Master data on suppliers is updated automatically while the system is compatible with clients’ business networks. The platform transfers and validates invoices in real time and features custom taxes/tax names for all countries as well as custom company identifiers for companies outside DK/DE/UK/IE/AT/CH.
Such capabilities coined the nickname “Skype for invoicing” of Tradeshift but Morten Lund, an early Skype investor, is an adviser to the company which means they are really betting on real-time communication. Moreover, the company gave access to its API, hence interested developers are free to upgrade and customize the platform, allowing small companies to get a tailored solution at a very low price.
Tradeshift’s platform was launched only in mid-2010 and very quickly managed to set foot in over 100 countries worldwide. This is an encouraging signal for a start-up that wants to change the way global invoicing business is working. Probably, they will face fierce competition from established vendors and we could witness unexpected moves from both sides. However, this innovative start-up made a flying start in lucrative business niche taking advantage of the fast-paced cloud-based solutions. Call it “Skype for invoicing” if you like, but major shifts in invoicing business are inevitable after Tradeshift’s system hit the market.
By Kiril Kirilov
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