Supply chain
finance is essential for ensuring smooth transactions and cash movement amongst
supply chain players. The traditional supply chain finance system, on the other
hand, is frequently plagued by inefficiencies, a lack of transparency, and
expensive costs.
With its
decentralized and transparent nature, blockchain technology has the potential
to revolutionize supply chain finance. This article will look at how blockchain
technology can disrupt supply chain finance while also providing major benefits
to organizations involved in supply chain operations.
Recognizing
Supply Chain Finance
The financial
activities and processes involved in managing cash flow and working capital
within a supply chain are referred to as supply chain finance. It covers a wide
range of financial services, including invoice finance, trade credit,
factoring, and supply chain risk management. Traditional supply chain finance
systems rely primarily on intermediaries, manual processes, and paper-based
paperwork, which causes delays, inaccuracies, and inefficiencies.
Blockchain
Technology is Disrupting Supply Chain Finance.
Increased
Transparency
Blockchain
technology creates a decentralized and transparent ledger that records and
validates supply chain transactions. All supply chain actors, including
manufacturers, suppliers, distributors, and financial institutions, can access
a shared, immutable ledger in real time.
This
transparency eliminates the need for parties to trust one another and lowers
the possibility of fraudulent operations. On the blockchain, each transaction
is securely recorded, ensuring traceability and accountability across the
supply chain financial process.
Cost savings
and increased efficiency
Traditional
supply chain finance processes entail a lot of paperwork, manual verification,
and a lot of middlemen. These procedures are time-consuming, prone to errors,
and have substantial administrative costs. Blockchain technology automates and
simplifies these operations, removing the need for intermediaries and
minimizing the requirement for manual intervention.
Smart
contracts, which are blockchain-based self-executing contracts, can
automatically trigger payments, validate transactions, and enforce agreed-upon
rules. Blockchain technology enhances productivity and lowers operational costs
in supply chain finance by removing paperwork, minimizing manual errors, and
automating procedures.
Transaction
Settlement in Real Time
Transaction
settlement delays…
