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Global Business Numbers

Online accounting is starting to get interesting as we see the benefits of having small businesses connected in the cloud. A key building block for electronic commerce is a Single Business Number (SBN). Many countries in the world do have a SBN but it’s something new for New Zealand.

Single Business NumbersOne of the benefits we have in starting Xero in New Zealand is that it’s small enough to get things done.  Over the past few years we’ve been lobbying hard for a SBN and at XeroCon a couple of weeks ago the New Zealand Minister for Small Business, Maurice Williamson, made some great announcements indicating SBN is well in progress. We were also delighted that the Minister was advocating a Global Number and not the New Zealand specific tax number (our GST Number). Maurice’s comments were noted here.

Peter Stevens is the CEO of GS1 – the local affiliate of GS1 International. GS1 is non-profit organisation dedicated to the design and implementation of global standards and solutions to improve the efficiency and visibility of supply and demand chains globally and across multiple sectors. He’s been helping understand the international standards for identification.

To support Maurice’s call Peter and I penned an article that appeared in the NZ Herald this morning to explain why our SBN should be a global standard.

Global Numbers

By Xero CEO Rod Drury, and GS1 CEO Peter Stevens

We’ve been a champions of a Single Business Number for a while and it’s great to see the Minister for Small Business, Maurice Williamson, now leading the charge. As momentum builds, Xero, along with the GS1 – whose aim it is to improve NZ supply and demand chains offshore – are keen to make sure what we come up with is a truly global solution. We’ve only got one chance.

The purpose behind SBN is to eliminate the multiple identifiers already used by government (e.g. GST number, Companies Office register number) and in doing so significantly reduce compliance and reporting costs.

A unique business identifier is also a key building block for enabling electronic transactions between businesses, and between businesses and the government. Electronic transactions are a clear way for NZ business to generate a step change in efficiency. Many businesses spend hours a week retyping invoices that originated in an electronic system. Imagine if invoices just appeared ready to go in your accounting system from any vendor.

At first pass the GST number – an obvious contender – seems logical. But this is a NZ-unique number and will do nothing to streamline business transactions between NZ business and their overseas customers.

New Zealand’s primary industries are looking at pasture to plate initiatives and being part of global supply chains. So rather than the New Zealand specific GST Number a superior option is to adopt Global Location Numbers (GLNs).

Global IDs for businesses have been around for many years. They are critical to many current business transactions. Global Location Numbers (GLN) are used routinely to identify businesses for:

  • the exchange of electronic purchase orders & invoices;
  • electronic catalogues;
  • for directing goods to stores or warehouse locations through Dispatch Advice notes; and
  • for the exchange of key traceability information (source of food items, trans-shipment points), etc.

We applaud that Maurice Williamson has identified that implementation of a global standard makes more sense that the GST Number. GLNs are globally understood, widely used by businesses around the world already, have a known data structure that is supported in most enterprise software and a lot of automated systems already in operation use them.

Other governments have realised that this is sensible – the Indian Government, for example, allows businesses to identify themselves either using their Indian Tax Number or a GLN. All farms in the US are identified with a GLN. The Australian government is using GLNs to identify organisations and facilities in the healthcare sector to increase the efficiency of the healthcare supply chain.

The NZ government needs Kiwi businesses to bring in foreign exchange – adopting a globally standard Single Business Number is a key building block.

 

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3 comments

Bruce Hoult
21 February 2011 #

A unique identifier, fine, it’s a good idea.

But why a “number”?

That was needed long ago when computers were stupid and had very limited storage. But now we can do much better.

Is there any good reason that the globally unique ID for your company can’t be simply “xero.com”?

Rod Drury
21 February 2011 #

Hi Bruce, absolutely. The Companies Office official company url (e.g. http://www.business.govt.nz/companies/app/ui/pages/companies/1830488 or even made more friendly to something like business.govt.nz/c/xero/1830488) is a candidate for this. However the NZ register of companies does not include sole traders and partnerships. So there would be some policy work to have all business entities register.

The Postal Address File (PAF) address is also an interim candidate to get things going.

Glad you raised it as we completely agree it need not be a number at all.

Rod

Kristof
1 March 2011 #

While I am all for streamlining business processes I am not convinced that backing GS1 GLN is the way to go. The GS1 NZ website is currently not available but looking at their international counterparts it seems you need to become a member including an annual fee to use any of their services. This is an additional expense you can easily do without being a small business.

GS1 states explicitly that GLN doesn’t provide the equivalent of a global address book which is really the functionality that would simplify things instead of adding an additional identifier you need to worry about. In other words as long as the adopted solution does not allow a company to change their address details in one central location which is then propagated to all customers and suppliers the amount of communication/unsynchronised databases will not diminish.

I don’t know the details of the Postal Address File but anything tied to a physical location can also quickly become impractical as well. Like a lot of other small businesses I work from home. I have moved houses 4 times in the last 3 years which would have required renewing my “permanent id” as many times.

The problem of numbers being unique to New Zealand could easily be solved by prefixing them with the standardised 3-letter ISO country code ie NZL094-253-667 for Xero Ltd.

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