How is Technology Transforming the Invoice Discounting Space?
The global supply chains are plagued with payment uncertainties leading to cash-flow challenges. Survey conducted reveal that 82% of the small-scale businesses fail due to inefficient cash flow management. Invoice discounting works to unshackle cash flow for businesses of any scale. However, the invoice discounting space is plagued by several issues including fraudulence by debtors.
This calls the need for a robust system that can do away with the inefficiencies of the existing invoice discounting system such as speed of disbursement and ghost invoices.
How does Blockchain work in an invoice discounting platform?
Blockchain being a decentralized digital ledger allows the entry of transactional data, which once uploaded cannot be altered. This makes the system tamper-proof. Let us explore the ways in which blockchain can change the invoice discounting space:
Assured Invoice Verification
The current Invoice discounting system handles multiple accounts and invoices. Verification of invoice data and reconciliation is a challenging activity. With the introduction of a public blockchain, each invoice will be changed into unique entry on the ledger so that all the stakeholders can procure and use the invoice data without risk of data manipulation.
Uniformity across the system
Currently, financers face challenges in processing and verifying the invoices as they have to deal with multiple invoice formats. Using digital assets as invoices ensure the varied formats are transformed into uniform assets that can be processed easily. This expedites the process and reduces manual burden.
Shortens Pay Cycle
As the invoices are verified at the point of source, the otherwise lengthy payment process is shortened. The financers no longer have to indulge in time-intensive process of manually processing the invoices. With blockchain platforms, the invoices get converted into digital assets, which makes end-to-end processing of invoices that too instantly possible.
In a nutshell, we can infer that introduction of Blockchain in the invoice discounting space will offer the much-required transparency, reduce risk of manual error or human intervention while automate the payments on the platform through the smart contract functionality. This ensures everything is running smoothly including issue pertaining to overdue invoices.