One of the world's largest electronic invoicing networks and one of the largest payment companies are joining forces to kickoff a supply chain payment platform that utilizes automated data collection. Forbes Magazine announced the collaboration between Basware and Mastercard and the unveiling of the new product called Basware Pay.
Closed Network Provides Security
The new platform allows approved invoices to be paid through a closed network which establishes a Mastercard virtual account number. Esa Tihila is Basware's CEO.
"We have supplier meta data," explained Tihila. "All the suppliers need to be approved by the buyer and then they are approved suppliers for that particular buyer. If you are not approved ... the invoice will be blocked and sent back to you."
Supply Chain Financing
According to the Forbes article, funding for the supply chain doesn't initially appear to be part of the collaborative effort, but the Basware Pay system allows banks to pay suppliers while collecting from buyers. Mastercard Enterprise president, Hany Fam, said the platform is a big asset.
"This market is nascent and in size it is bigger than the entire consumer market. It is very under-penetrated electronically. While the consumer space is 85 percent non-electronic, this is north of 90 percent," Fam explained.
The combined effort will let suppliers receive their payments earlier than before and will also give buyers extended payment terms. A Bloomberg story expanded further upon the new platform. Their report said the creation of the platform is geared toward reducing late payments and cash hoarding. Bloomberg said more than half of the world's international businesses have deliberately not paid suppliers during the past year.
Fan added that the uniqueness of the transactions is pretty special.
"Other networks usually are at the company level and we are at transaction level, globally. You could have the smallest supplier to the biggest corporations and transactions for oil tankers to a pack of pencils. Financial institutions are pretty excited because they can go fishing beyond their usual footprint," Fam added. "Those who have their act together will do well big time. There are great opportunities here for financial institutions to widen their reach and get clever on transaction-level funding."
The two companies have been working on the new platform since the announcement of their teaming up just about a year ago.