Defining Smart Invoices
Our goal is to demonstrate how smart contracts can specify and enforce payments for real-world invoices, transferring funds from buyers to sellers. Specifically, we aim to ensure that once a buyer accepts an invoice, they commit to paying by the due date.
Ethereum Limitations
Ethereum’s design imposes constraints:
- No native support for "triggers" or event-driven programming.
- Payments cannot auto-execute on the due date. Instead, anyone can trigger payment execution after the deadline.
Core Smart Contracts
1. Smart Invoice
- Purpose: Simple, auditable commitment from buyers.
- Fields: Payment amount, due date, payer, beneficiary (updatable).
- Note: All fields except beneficiary are immutable for transparency.
2. Smart Invoice Token (ERC20)
- Purpose: Tokenize the invoice to enable secondary use cases (e.g., selling tokens for early liquidity).
- ERC20 Standard: Each token represents 1 DAI.
3. Wallet
- Function: Holds DAI and interacts with smart invoices.
- User Control: Buyers/sellers manage their own wallets to commit/execute payments.
End-to-End Workflow
Preconditions
- Accounts: Buyer and seller need Ethereum-funded accounts for gas fees.
- Funding: Buyer holds DAI (e.g., 1,000 DAI converted via
BigNumber).
Steps
- Wallet Creation: Buyer and seller deploy their wallets.
- Invoice Creation: Seller creates a trade invoice (on-platform) and wraps it into a smart contract.
- Commitment: Buyer verifies and commits to pay via their wallet.
- Token Allocation: Seller holds all invoice tokens and confirms buyer’s commitment.
Execution: Post-deadline, seller triggers payment:
- Smart invoice status checks (must be "committed").
- Token balance validates the invoice amount.
- Settlement: Seller redeems tokens for DAI and transfers funds to their account.
Key Observations
- Trust: Ethereum’s transparency enhances trust in B2B settlements.
- Flexibility: Tokens enable liquidity before invoice due dates.
- Pilot Scope: Designed for illustrative purposes, not mass invoicing.
FAQs
Q1: Why use DAI instead of ETH?
DAI’s stablecoin nature mitigates crypto volatility risks, making it enterprise-friendly.
Q2: Can invoices be modified after creation?
Only the beneficiary can be updated; other terms are immutable.
Q3: What happens if a buyer lacks funds?
The project assumes pre-funded wallets. Insufficient funds fall outside this scope.
👉 Explore Ethereum-based invoicing solutions
This article adapts original content from Blockchain Research Lab, focusing on technical education. Commercial references and non-English elements were removed for clarity.