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.
One 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.
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.
Read more about Company News