Supply Chain Finance and Blockchain: The Future Ahead

Blockchain has transformed the payments and securities ecosystem significantly. The innovative technology has already made a solid ground in the financial sector with supply chain finance (SCF) being the most affected one. In fact, the scope is already widening as the complex operations, and banking requirements cannot be served via traditional finance solutions. Let us have a look at how Blockchain can impact the supply chain finance.

Transparency

The first and foremost benefit is the much desired transparency. Every supply chain participant will be able to track the goods and will be aware of every point of the transaction. So basically, the paperwork is eliminated with the use of digital ledger. It means less manual intervention and more efficiency and transparency in the business operations.

Smart Contracts

Now, supply chain finance Blockchain solutions are operated in smart contracts, where all members of the supply chain are accessing one single ledger. The ledger gets updated at every stage of the transaction. Smart contract functionality of Blockchain ensures automation of transactions thereby improving supply chain efficiency.

Blockchain development companies are now devising specialized solutions to work for supply chain finance.

Faster Completion

Another significant use of a blockchain in the supply chain finance sector is to ensure more rapid completion of the transactions. It means faster processing of an invoice, less paperwork, and more efficiency. For instance, extra KYC checks that need to be done at every step of the transaction can be avoided with a Blockchain solution in place.

Documentation

Since, data once uploaded on the Blockchain becomes immutable. Information of the purchase, bills, custom details and so on, all can be stored digitally. In this way, banks will be able to see all the information clearly and provide financing.

Blockchain can help streamline several processes in supply chain finance like financing through POs, inventory financing, reverse factoring and so on. It allows manufacturers to track the flow of goods and for the suppliers to track the cash flow and transactions.

To conclude

Blockchain offers simplification of process and expedites the entire SCF. This would, in turn, mean lesser costs and more benefits to manufacturers, suppliers, and financiers in terms of better control and transparency of operations.

As a leading player in the Blockchain space ‘Sofocle’ offers its robust and market-ready product ‘Certum’ that is designed to address the pain points of the current supply chain industry.