Context and objectives

At EHDA we recently completed a blockchain experiment called Smart Invoice. The purpose of the experiment was to prepare the building blocks required for Trade Credit Insurance on Blockchain. The newly created Smart Invoice allows a business issuing an invoice (the seller) to upload that invoice to the Ethereum Blockchain and monitor the receipt of payments (made by the buyer) and the evolution of the payment status of the invoice.

As Blockchain technology opportunities continued to grow, the next step was to explore how Trade Credit Insurance might be deployed on Blockchain, using Smart-contracts.

The purpose of “Smart Trade Credit Insurance - credit insurance powered by Blockchain”, is to enhance Smart Invoice by adding credit insurance services. To develop our platform for this, we decided to use Ethereum Smart Contracts to host the Trade Credit Insurance services.

The “Smart TCI” POC (Proof of Concept) platform allows the seller and their counterparts to register and manage their invoices on the Ethereum Blockchain. Every time the status of an invoice changes, a notification is sent to the counterpart.  

Smart TCI allows the seller to subscribe to trade credit insurance per invoice. Blockchain provides security, efficiency and transparency to the processes between the seller and the insurer, in this case Euler Hermes.

The platform allows the seller to add TCI to one of their invoices, and the TCI then becomes a counterpart of the invoice, thus receiving all the information about its state evolution and reacting accordingly automatically.

A “Smart contract” is a computer program stored on the Blockchain that will activate specified actions triggered by specified events. When a seller uploads an invoice or subscribes to TCI services on the Smart TCI platform, a new “Smart contract” (i.e. a Smart insurance contract) is essentially created and hosted on the Blockchain. The Smart TCI contract is set up using the details of the specific invoice uploaded (amounts, dates, etc.) and its execution is defined by rules of a generic TCI “Smart Contract”.

This is the structure of all the interactions passing through Smart TCI

This is the structure of all the interactions passing through Smart TCI

 

What did we do

We started with our Smart Invoice implementation, and enhanced it further by adding dynamic management tools and dynamic generation of events. These new additions are essential to allow completely autonomous interactions between Smart Invoice and Smart TCI.

In addition, we developed an open platform web interface that allows the simple management of Smart Invoices, including creating, confirming, modifying and deleting Smart Invoices. The platform allows a business  to easily register their invoices on the Blockchain through a web interface.

We set out to develop the web interface to be simple to use and to be as fast as possible. To make our platform easy to use, we minimized user interactions and reduced the amount of data input requirements.

As a fundamental requirement, Smart TCI was built as a system that can be connected to third party online accounting platforms that manage online invoicing. We encourage and invite third party platforms to connect their services to our Blockchain.

Services can be easily linked to Invoices hosted on the Blockchain. Smart Contracts will host processes that will be triggered depending on specific counterpart actions.

For this POC we implemented three types of smart contracts that constitute the architecture of the Blockchain backend :

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  • Central contract: this type of smart contract sets up the rights to create and manage the invoices uploaded by platform users.

  • Invoices: this type of smart contract contains all the properties of an invoice hosted on Blockchain. Once created, it manage itself in function of its states and with the control of some restrictions to ensure who have the rights to manipulate it. Besides, it has the capacity to accept any other contract linked to the invoice.

  • TCI: this type of smart contract sets up the Trade Credit Insurance provided by the insurance company, in this case Euler Hermes. The contract is connected to Euler Hermes Services, which will receive invoice events (subscription, payment, late payment notification, claim, etc.). These events are also shared to the Euler Hermes platform. All actions, from subscribing to TCI to filing a claim are contained on the Blockchain.

 

Conclusion

Blockchain technology and Smart TCI are a perfect fit. Smart TCI benefits from the key properties of the Blockchain, especially the traceability, security and the immutability of the records contained on the Blockchain. Furthermore, thanks to the Ethereum smart contracts, invoices and their services will be managed automatically, performing the key functions and actions on behalf of the different counterparts.

With Smart TCI, EHDA has now opened the experimentation to third party contributors who can host their invoices on the Blockchain.

Invoices can theoretically host many other types of additional contracts. Our Trade Credit Insurance contract which we developed for Euler Hermes is one such an example, and contributors can also develop new services linked to invoices (e.g. financing, shipment tracking, and many other potential invoice-linked services).

The source code is public and hosted on GitHub :

https://github.com/eulerhermesda/Trade-Credit-Insurance-on-Blockchain

A video demonstration of Smart TCI is available on YouTube:

We are interested in hearing your feedback about our experiment.

Please reach out to to us and arrange to meet our Blockchain experts and discuss other exciting Blockchain opportunities.

Ilias Hmani, Blockchain developer of this experimentation
Pierre Sein, Blockchain expert
Charles Ruelle, Head of Innovation

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