Usecase 1 : Invoicing and Online payments with the Request Network
Each year there are billions of invoices that are shared between companies, most of these invoices are still send in paper and email form
at which have to be copied. Obviously, this results in a large number of errors, especially when tax rules or advanced payment are applied.
With the Request Network, invoices can be shared directly via the ledger, there will be no more duplications because accounting systems will be plugged in and updated immediately.
The company awaiting payment will be able to detect a delay immediately, which will happen less often due to the development of invoice payment systems. The company has the ability to pay on the optimal date at the time of receiving the request.
Each year, thousands of small and medium-sized enterprises (SMEs) bankrupt while waiting for their invoices to be paid. The ECB (European Central Bank), in particular, is setting up solutions that Request complete by adding a payment reputation system and key indicators. Today, a provider still has to trust its client and might not be paid. Tomorrow, the provider will be able to verify the payers’ clients reputation and other indicators, such as DPO (Days Payable Outstanding) before agreeing to a contract.
Usecase 1.1: Online payments For example, shopping on Amazon requires payment by credit/debit card, thereby exposing sensitive information. Alternatively, selecting the option to pay via Request, the users’ data remain protected. Amazon will post a Request on the network, the user’s account will detect it and request a confirmation of payment from the user. This will trigger a transfer at the lowest cost, without exposing the payment information.
It becomes possible to avoid unforeseen credit/debit card payments that services charge in a hidden way because it provides a way to validate payments before they happen. Request empowers people. The advantages of Request, compared to current systems, are :
• Security: Payment information is never shared, there is no risk that someone intercepts and reuses banking information.
• Simplicity: One click to pay, and no manual input error possible.
• Cost: No third-party like Paypal, Bitpay or Stripe, all of whom are providers that charge between 1% and 7% of the amounts sent. Request reduces the cost.
Use case 2: Automation of jobs: Accounting, Audit, Expenses
With Request, the accounting is done automatically and in real time. Beyond cost reduction, this allows for better, faster financial management, and with more information.
Use cases for accounting purposes: Request brings simultaneity to the accounting process. Payments, accounting, and VAT refunds/payments are done automatically.
This is a revolution, expected by experts, that raises some questions about the future value of external audits. Indeed, a third validation point is added to double-entry accounting systems11, and this is where auditors are currently acting for the validation of the authenticity of accounts.
Moreover, Request allows the digitization of accounting systems, where one currently spends the time to duplicate efforts through repetitive documentation and frequent checks. These manual tasks can now be automated. Request will transform the role of a CPA into consulting and support activities. This system leaves more time for value-added tasks, such as analysis, estimation, and strategy.
Technically, credit notes, purchase orders, reimbursement, and every accounting concepts will be possible on Request. The system will be compatible with the UN/EDIFACT standard and able to be updated to the latest standards.
Use case 2.1: Audit
With Request, audits become a simple algorithmic check, thanks to the immutability of the system. In comparison, in 2014, Microsoft paid $46.2 million in audit fees to Deloitte. Similarly, Bank of America paid nearly $100 million. In total, the 100 biggest companies in the United States paid $2.5 billion in audit fees. Henceforth, audits will be carried out in real time. Let’s call them Smart Audits. Blockchain auditing solutions (”smart audits”) will likely become a reliable and inexpensive alternative to today’s manual audits.
Request brings significant benefits for improving the efficiency of such audits. In terms of digitization, accounting software, states and companies are still far from optimal. Many companies send invoices by mail every day, and most of them have missing invoices at the end of each year. Yet the rules are clear. The methods and technological support could change everything and substitute the intercompany and inter-subsidiary costly controls, which are carried out to ensure the reliability of the accounting statements. In the computer consulting industry, the cost of the accounting officer’s time to process an invoice is between $5 and $15. To this amount can be added the time necessary for monthly checkings and corrections. The automation of the entire system is slow
The use of blockchain for accounting is an opportunity to simplify compliance and improves double-entry accounting. Double-entry accounting dates back to the Renaissance, where it allowed managers to have confidence in their own reports. Nowadays, to justify trust, independent auditors verify the information of the major groups in a process that is costly in both time and money. The audit firm then becomes a trusted third party guaranteeing the veracity of the information established by the financial statements. However, the auditors maintain responsibility for the companies, which generates mistrust. Do the auditors work for the managers of the companies that mandate them, or for the service of the third parties who consult the information for free?
Thus, instead of holding internal accounts and publishing them after the annual audit, companies can keep accounts in a decentralized, confidential and a shared database with blockchain technology.All accounting entries are then entered into the register, without the possibility of backdating, which means there is no opportunity for falsification. Therefore, it would become more difficult to make questionable year-end adjustments, and most importantly, the company benefits from this system in real time. Shareholders and external parties have access to real-time information. The cost of auditing becomes insignificant, and accounting entries no longer require duplicate manual checks. Finally, the integrity of the financial statements can no longer be called into question when customers and suppliers are interconnected with this system, at least by their cryptographic addresses.
Request is a distributed registry that acts as a source of confidence, ultimately allowing these ”smart audits” in real-time. It includes all purchases and sales of the company. Instead of having double-entry accounts, where the information regarding a purchase appears in the purchase account and in the bank account separately, one can see within the blockchain a purchase account, linked to the supplier, linked to the Mary Driscoll 13 payment, and linked to the bank account.
Traceable, immutable, and authentic. Request proves the integrity of archived electronic records.
It is a gateway to the trade of the future.
Use case 2.2: Expenses
With Request, expense reports are easily shared between employees and businesses, without getting lost or altered. A system of expense management will allow employees to select and send, in real time, their professional expenses to their manager, who can accept and refund them when ready.
Use case 3: Business logic and trade Laws: Government Tax
Governments requiring companies to report all transactions could again be creating errors and duplications. Request allows governments to specifically view the real-time transactions that they have access to. Furthermore, the development of a module to levy VAT, or, for example, a transatlantic tax, will redirect the money automatically. Whether one is pro-government or not, the possibility, for the first time, to simplify and make transparent the levies of taxes is a real improvement.
Blockchain technology allows government agencies to have the ability to detect financial instabilities, fraud, money laundering and financial crime in advance, and operate based on these observations.
The UK government’s scientific wing has recently identified a number of ways that the blockchain can ”revolutionize citizen-state relations.” For example: helping the government collect taxes and distribute aid.
Use case 4: Simplification of commercial tools: Factoring, Escrow
Request will allow easy access to tools like escrow or factoring for businesses and individuals. Allowing in 1 click to choose to pay only upon delivery of a product or service, for example, or to secure the deposit of an apartment on escrow, rather than crediting the account of the landlord.
Simple and above all at a lower cost. Indeed, escrow can be automated and based on oracles. As for factoring, companies will be able to use the best system of credit scoring that exists: the ”On Chain” reputation . By assigning a unique fingerprint to every invoice and publishing them on the blockchain, double invoicing are avoided because an invoice can be coded in the blockchain only once. A smart contract will then allow such companies to cancel an existing request to replace it with 2 factoring requests.
Use case 5 : Transparency of institutions.
Budget transparency for institutions (Governments, City Halls, Associations) is on the agenda of the OECD and the World Bank which helps:
• Accountability: Clarity on how the funds are spent is necessary so that public representatives and officials can be accountable for effectiveness and efficiency.
• Integrity: Sunlight is the best policy for preventing corruption and maintaining high standards of integrity in the use of public funds.
• Inclusiveness: Transparency invites for an informed and inclusive debate about the budget policy impacts. 14
• Trust: We are in the era of open source projects and collaboration, transparency fosters trust in a society where peoples opinions and interests are respected and where public money is used appropriately.
• Quality: Budget review, as code review, allows to detect waste, misuse and gives insights on how to improve the outcome for more responsivity and impact.
Request proposes a framework which allows these institutions to adopt transparency conveniently, to publish their account in real time and to anyone to audit and use these data. As the framework gains in popularity, more tools will be developed and, for example, give us a dashboard on our city expenses.
This transparency can be applied to other industries and can help us identify the origin of some products and if they are issued from a short food circuit.
Use case 6: IOT and Smart Contracts.
An exciting challenge of the coming years will surely be to imagine how objects, machines and artificial intelligences will interact with each others, and how they will automatically negotiate and define payment terms. They will need a payment framework which specifies the payment and help to define the reasons and conditions of the transaction.
One can imagine a self-contained car order a new wheel to a virtual garage, make a down payment and pay the remaining 90% only at delivery.
All of the information in this article has been taken from the whitepaper of request network which you can find here
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