We interviewed James Stirk, the Chief Revenue Officer at Tradeshift. Below are his answers.
Can you tell me a little about the history of Tradeshift?
Tradeshift started life in Denmark a little over 12 years ago when our three founders, Christian Lanng, Gert Sylvest and Mikkel Hippe Brun met while working on a project for the Danish Government.
The project they were working on involved creating an electronic invoicing system which would allow businesses to exchange invoices digitally with government departments. They went on to play an important role in the creation of PEPPOL, an EU-wide standard for exchanging electronic documents such as invoices.
The experience working on these projects was really the inspiration for Tradeshift, which envisioned a future where every company in the world could connect on one common digital platform that would make it easy, quick and straightforward.
That clarity of vision and the networked approach to connecting businesses were some of the key factors that drew me to Tradeshift. Even today, around 85% of global trade is not digital. It’s a massive opportunity and we’re uniquely positioned to help drive transformational change.
When Tradeshift was founded social networking sites were becoming ubiquitous in the consumer world. Tradeshift took inspiration from sites like LinkedIn allowing businesses to connect with one another on a single network that delivered a compelling value proposition for both the buyer and the supplier.
For companies like DHL that means connecting thousands of suppliers around the world onto a single digital platform. Once they’re connected then you can then digitise virtually any aspect of the relationship from invoicing, through to purchasing, risk assessment of suppliers.
I notice your website refers to AP Automation and E-Invoicing could you give some details about these two pieces of tech?
Analyst firm Ardent Partners estimates that just under half of all invoices are still paper-based. Dig a little deeper however, and a large proportion of so-called ‘electronic invoices’ are just scanned PDFs that a supplier sends via email.
PDFs might be a step up from paper, but only just. Processing remains incredibly inefficient, error-prone and expensive. And because you’re effectively handling dumb data, it’s very difficult for technologies like AI and automation to function on top. Meanwhile, finance leaders struggle to get anything like the level of real-time transparency they need to make effective decisions.
There are plenty of technology vendors selling e-invoicing and AP automation solutions. And there are also plenty of businesses that have been left feeling burned after implementing this technology only to see it fail on its promise. We saw the flaws in this approach early on and we set out to do things very differently.
The majority of business software is designed purely with the interests of the enterprise buyer in mind. A huge number of E-invoicing and AP automation projects fail because of a lack of supplier adoption. It’s hard to blame the suppliers for resisting when the software they’re being asked to use is simply not designed with their interests in mind. Some e-invoicing vendors even charge the supplier a fee for submitting an invoice.
Most e-invoicing projects top out at around 15-20% supplier engagement, and generally focus on the largest suppliers. The irony is that larger suppliers tend to be the least likely to send invoices that have problems or errors. They’re also far less likely to come under financial stress if they get paid late. So, it’s not really fixing the problem.
At Tradeshift we’re focused on delivering 100% digitalization across every supply chain relationship. The way we do this goes back to our roots. Tradeshift started life as a free e-invoicing tool for suppliers. Before we moved into the enterprise arena, our proposition already had a strong supplier value proposition baked in at the core.
For enterprises that want to digitalize their entire ecosystem of supply chain relationships at the transaction level, the Tradeshift network helps them achieve this by giving suppliers tools they actually want to use.
I also note that you have a section about E-invoicing in France. Are there any regulatory requirements specific to France?
What’s happening in France is part of a global compliance trend. Governments lose billions every year in unreported VAT. They see e-invoicing and ‘Continuous Transaction Control’ (CTC) as a way to close this VAT Gap.
France has decided to move towards a “mixed CTC model” which will include mandatory B2B e-invoicing and e-reporting. The CTC reform will initially affect around 300 large, French-domiciled businesses in 2024 with an eventual roll-out to smaller businesses by 2026. All companies, regardless of their size, must be capable of receiving e-invoices by 2024.
There are a few different ways that businesses can handle this process. For most large organizations they will choose to work with a “Plateforme de Dématérialisation Partenaire” or PDP. Tradeshift is one of a select group of companies that have qualified to participate in the PDP accreditation process.
Tradeshift offers tools for international compliance in 53+ countries, including India and China. For large organizations with a global footprint, having one partner to manage compliance globally takes a lot of the pain away.
Tell me more about your B2B Marketplace.
B2B marketplaces is a massive emerging area for us, and a huge market overall. The potential B2B e-commerce market is roughly five times the size of its consumer equivalent.
Online marketplaces are going to replace large segments of procurement over time. We saw an opportunity to become the Shopify for B2B —creating a ready-made environment for businesses to build and run their own marketplaces on our platform.
What we’re creating is a ‘network of marketplaces’ all accessible through the Tradeshift platform. For buyers, access to a networked marketplace environment provides choice, transparency and competitive pricing. If a buyer is in the automotive sector, for example, they might choose to join one marketplace for direct materials and they can also access other marketplaces for indirect spend such as office supplies. Crucially, this can all take place on a single platform and through a single user interface.
Does your company use AI, machine learning or any of these more recent tech developments?
AI and machine learning are central components of our proposition. We launched ADA, our AI layer around five years ago. Today, ADA is used in applications as varied as customer support and guided buying on marketplaces, through to coding and matching on invoices.
AI is only as strong as the data that underpins it. Because the data that runs across our platform is digital at source, it means we can apply AI and automation very early on in any process.
That’s a real advantage when it comes to something like invoice processing. We use AI to fix errors and address problems on the supplier side, eliminating a lot of unnecessary workflows that would otherwise slow things down. We’re getting very close to a point where invoice processing on Tradeshift is 100% touchless.
What do you think is the future for tech and finance? What are possible future developments in this space?
Chat GPT is arguably the biggest story in tech in a decade. A lot of people are understandably concerned about the impact on jobs. Even now, 40% of jobs in accounting can be automated and another 30% are ripe for automation. Does that mean people are going to lose their jobs? In the short term, perhaps. But the reality is more nuanced. AI won’t get rid of workers. But workers that aren’t using AI will get replaced.
I also see AI and digitalization combining as a force for good in areas such as supply chain sustainability. As I said before, once you establish a digital foundation across an ecosystem of buyers and suppliers there is no limit to the kind of information you can feed through that connection and analyse. We’re already seeing customers using invoice data to monitor scope 3 emissions across their supply chains. Market forces dictate that both the sophistication and the demand for these checks will grow rapidly in the next couple of years. We’re very well placed to help.
The final area that I’m really excited about right now is embedded finance. There’s been a huge revolution in the consumer fintech space over the past few years, but B2B is behind the curve. That’s changing rapidly, starting in areas such as supply chain finance and traditional factoring which have long been ripe for disruption. These innovations are paving the way for a revolution in any number of other financial products, from buy-now-pay later service, through to loan agreements, insurance, forex – it’s a really pivotal period and we’re already making significant inroads in this space. Expect to hear a lot more from us on that.
James is an accomplished leader with 25+ years of experience building strategy, sales growth and business development for established Multinationals (Fortune 500) and smaller (PE backed) organizations across finance, ERP, business intelligence and cyber. Based in the UK, James joined Tradeshift in 2020. As Chief Revenue Officer, he is responsible for scaling revenue across Tradeshift’s commercial & customer facing business units and refining the company’s go-to-market strategy.