e-Invoicing Fuelling a Rising Commerce Finance Alternative in SME Digital Banking

The rising adoption of e-invoicing globally is coinciding with a decline in using conventional commerce finance devices. And a rising dependence on provide chain finance options fuelled by digital information. Banks, for whom commerce finance has largely
been a concentrated market, have a singular alternative to enter the fray. e-Invoicing automation will help banks ship a lot wanted commerce finance options embedded inside their SME digital banking suites.


In accordance with the Worldwide Chamber of Commerce (ICC), 90% of the normal commerce finance market is served by 13 banks. Nevertheless, the panorama of conventional commerce finance, comprising devices like letters of credit score (LCs), documentary credit score and
ensures, itself has been shifting. Knowledge exhibits that the share of worldwide commerce utilizing documentary credit score declined from 50% within the Seventies to an estimated 15% in 2018. LCs have equally seen a destructive progress pattern since 2014, and had fallen 2.7% by 2018.   

Then again, provide chain finance (SCF) options, fuelled by the rising integration of bodily (logistics) and monetary commerce information, are seeing growing traction. In accordance with information from the Financial institution for Worldwide Settlements (BIS), an estimated
80% of worldwide commerce occurs on open account transactions, which in flip facilitate provide chain finance. 

On this situation, the rising adoption of e-invoicing and the ensuing automation in verification, tax reporting, and bill administration is proving to be the right catalyst for data-driven provide chain finance options.  

For banks globally, provide chain finance is an rising space of curiosity. An ICC international survey of 251 banks in 2018 discovered that solely 15% of the banks’ commerce finance associated actions pertained to produce chain finance. With this immense scope for progress,
banks as we speak have the chance to combine e-invoicing options into their treasury administration and business banking choices, and use this to scale provide chain choices to each, company purchasers and underserved SME companies.

World Panorama for e-Invoicing

e-Invoicing as we speak stands for lots greater than digitalised, structured bill information; it has fuelled a whole ecosystem of options round use circumstances like real-time steady transaction controls and clearance, with suppliers and consumers exchanging invoices
through centralised authorities infrastructure. e-Invoicing mandates worldwide are pushing markets, particularly provide chain answer suppliers, to undertake standardisation and digitisation of invoices throughout enterprise to enterprise (B2B), enterprise to authorities (B2G),
and authorities to enterprise (G2B) situations. As proven in Exhibit 1, maturity of e-invoicing adoption shouldn’t be restricted to developed markets. Growing markets exhibit that authorities mandates for e-invoices are the largest enablers for his or her rising potential.

Global e-invoicing landscape


In accordance with a Billentis market report, roughly 5 billion B2B e-invoices are anticipated to be processed globally in 2022 through service suppliers (Exhibit 2). Asia Pacific (APAC) is predicted to be probably the most promising marketplace for e-invoicing progress due
to sturdy acceleration with excessive progress charges in shopper, enterprise and authorities segments.

e-Invoicing Markets & Volumes 2022



Invoicing Automation Can Assist Deal with Challenges in Provide Chain Finance

The worldwide e-invoicing answer, service supplier and enabling market was estimated at a price of USD 8.74 Billion in 2021 and is anticipated to achieve USD 29.68 Billion by 2027 at a CAGR of 21.5% throughout 2022-27. As seen in Exhibit 3, this panorama is at present
dominated by expertise options suppliers, and fintechs, who’re primarily serving as tech facilitators.

B2B e-Invoicing Solutions LandscapeGiant scale authorities e-invoicing mandates like India’s GST are resulting in digitisation of supply-chain
finance. Giant ERP answer suppliers have launched built-in plug-ins for creating compliant e-invoices for a number of international locations and in addition built-in tax submitting codecs. Nevertheless, gaps in a completely digital, seamless expertise for each, consumers and sellers nonetheless
exist as a consequence of fragmentation of supply, fragmentation of the underlying property, restricted credit score and experience, and cross-border friction as a consequence of geopolitical tensions.

e-Invoicing automation, particularly when built-in with a financial institution’s money and treasury administration providers has the potential to handle among the most persistent fragmentation challenges.


e-Invoicing Automation Can Unlock SME Commerce Finance for Banks

Banks’ participation in commerce finance has historically been as a part of providers provided to giant company consumers. On this situation, financing has largely favoured bigger suppliers,  whereas smaller supply-chain distributors stay underserved. e-Invoicing is
growing the visibility of smaller supply-chain distributors’ monetary well being and transactions. Particularly, e-invoicing permits cost-efficient onboarding and servicing of SME suppliers with:

  • Full and verified due diligence and KYC with mandated tax registration

  • Verified invoices and visibility into unpaid invoices

  • Verified tax and bill information out there for modelling

  • Potential for accounts payable/accounts receivable (AP/AR) automation

Banks are thus properly positioned to evaluate the monetary well being, financing necessities and credit score worthiness of a bigger pool of suppliers, and supply trade-centric financing providers, like provide chain financing, dynamic discounting, public sale marketplaces, buyer-led
bill finance, p-cards, vendor auctions, factoring and bill finance. 

Company clients extensively use money administration and treasury providers from the banks. e-Invoicing built-in into treasury administration will be provided to each company and SME segments. Digitised and automatic enterprise processes for invoices have potential
to be built-in with accounting software program and provided as worth added providers with treasury administration, like creating, scheduling, transmitting invoices to clients, invoice payer providers and fee providers. Exhibit 4 highlights the worth addition that may
be created by banks with this strategy.


e-Invoicing for SME Digital Banking


With e-invoicing mandates and steady transaction controls (like e-way payments in India), banks can ship the next provide chain finance options to SMEs:

  1. Reverse Factoring: With e-invoices verified and processed in 24 hours, a bigger pool of invoices will get authorized by the company consumers. Banks can construct a reverse factoring service to SME sellers with e-invoices providers built-in into treasury

  2. Bill Factoring: Bill factoring will be straight provided to SMEs who’re business banking purchasers or this sector will be served by massive banks as credit score worthiness and KYC will be ascertained in virtually actual time, even for brand new sellers or

  3. Dynamic Discounting and Funds: By means of Request-to-pay (RTP) fee providers built-in as worth added providers in treasury administration, banks can supply automated dynamic discounting alternatives checklist with assessing money movement and actual time
    AP/AR reconciliation of each consumers and sellers.

  4. Provider Bill Administration: Embedding e-invoicing into on-line banking or business banking providers addresses an enormous ache space for SMEs of economic administration of invoices. Invoicing interoperability (for B2B and B2G) is obtainable
    solely by giant ERP answer suppliers and is probably not accessible to SMEs; banks can leverage this service hole with embedded E-invoicing.  

  5. Digital Storage or Archiving Invoices: Administration and upkeep of compliance information which is archived is a weak space for SMEs. Banks providing this service can steadily assist construct stronger stability sheets for SMEs and produce them to pool
    of institutional credit score financing.


Constructing capacities for provide chain finance is rising as an vital strategy to serving the USD 1.5 trillion commerce finance hole. SMEs, representing 45% of this hole, are an vital however underserved worth pool for the availability chain finance market.

The e-Invoicing public infrastructure panorama is witnessing an growing emergence of presidency, private and non-private our bodies, like TreDs (India), BPC (Oceania and Europe) and Peppol (Pan European Public Procurement On-line), which are spurring innovation
and integration in provide chain finance options throughout sellers and consumers, aggregators, lenders and authorities. Steady transaction controls and clearance are an vital piece of the e-invoicing automation enabled by this ecosystem.

Banks, with their present commerce finance and treasury administration infrastructure, are well-placed to undertake these rising capabilities, and ship built-in enterprise banking and provide chain finance providers to SMEs and corporates alike. 



1) OECD, 2021, Commerce Finance for SMEs within the Digital Period,

2) BIllentis, eInvoicing Market Assessment,

3) Analysis and Markets, E-Invoicing Market: World Trade Traits, Share, Dimension, Progress, Alternative and Forecast 2022-2027;


4) Asian Growth Financial institution, Commerce Finance Gaps, Progress and Jobs Survey, 2019,



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