Fighting Supply Chain Friction in the World of Trump and Brexit
For a generation western governments have promoted globalisation and trade deregulation, but things may be changing! The political debate has shifted and now there is the prospect of a Trump trade war and uncertainty about trade regulation in Britain post Brexit. Both create a real risk that friction will increase significantly in the supply chain. At the same time, fiscal pressures are forcing governments to police sales tax collection far more effectively, driving greater supply chain disclosure and governance. This process started in Brazil, Mexico and India but has now extended to Italy and may well go further.
The question for business is what can still be done to minimise friction in this new and tougher external environment. Here is how two of Tungsten’s partners see the problem:
Paul Harvey, Head of Procurement Operations and Infrastructure at Marsh McLennan Companies (MMC) explains: “One of the main challenges is currency and how you deal with multiple currency transactions in one country. I think there is a need for a tool that allows vendors to choose which currency they get paid in. Another challenge is tax and that’s only going to get more complicated. We need more robust solutions in place to help us deal with the complex tax calculations required by different jurisdictions.”
Christoph Zenner, Partner, Indirect Tax, PwC Business Advisory, adds: “The global economic crisis is rumbling on and leading to increased scrutiny of Government budgets. Treasuries need to collect more tax and collect it more effectively. This is resulting in a move toward electronic invoicing and data mining which creates additional burden for companies as they need to provide the correct information and money to authorities.”
Against this backdrop, technology and in particular electronic invoicing, is providing a lifeline for forward-thinking companies. While organisations themselves are ultimately responsible for complying with local tax regulations, the outsourcing of administrative processes to specialised third party service providers such as Tungsten Network means that companies can have peace of mind that their invoices are compliant, helping to remove friction in the supply chain. We have the expertise and resources in place to deal with ever-evolving tax legislation and are able to guarantee that invoices going through our platform are tax compliant in 48 countries. This can lift a huge burden from businesses and massively support the pursuit of frictionless trade.
Adopting e-invoicing removes paper from the payment process, is highly efficient, eliminates invoice fraud and could minimise the workload in a post Brexit world. The paperwork that will no doubt be required in cross border trade from April 2019 onwards is inextricably linked to invoicing and therefore already in place for anyone with an e-invoicing facility.
While cross border trade is getting increasingly complex, technology is available to help businesses get paid quickly no matter what currency they are using and to navigate the compliance minefield with ease.