As companies, we’re all buying and selling—exchanging everything from raw materials to services to finished goods. Collectively, all of our companies form a massive, globe-spanning supply chain.
That supply chain is undergoing a digital transformation—and that transformation is bringing with it a new era of business transactions.
Fueled by the Internet, cloud computing, APIs, and mobile, the buy-side of our companies is digitizing every process from procurement to payment. The supply-side of our companies is digitizing everything from quoting to collections. Even with all the digitization that’s already occurred, the pace of change is only picking up, with more new technologies that enable automated, trusted transactions. Industry 4.0 is accelerating.
The current era of business transactions is outdated. Physical documents and PDFs don’t provide the efficiency and transparency that modern businesses need, with an antiquated document-exchange model that requires each party to manually enter transactions into their own separate ledgers.
In this new era, business transactions aren’t documents—they’re data. These new business transactions will reshape supplier and buyer integration. Transactions are recorded in a single source of truth for both parties, as well as for auditors, creditors, and other 3rd-parties. Transactions are automatically verified and synchronized between the supply-side and buy-side systems.
There will be winners and losers in the digital supply chains, of course. Buyers will insist on transacting business their way. Those of us who become winning suppliers will adapt to buyers’ operational requirements, integrate with existing systems, and automate all transactions between parties. Winning suppliers will be customer-centric, agile, and efficient.
At Globys, we have a vision for this new era of business transactions that takes advantage of recent technologies, including shared ledgers, smart contracts, integration, and machine learning.
We believe four things are true about this new era:
1. All parties want a single source of truth for business transactions. A shared ledger using blockchain or some similarly immutable ledger can provide this, reducing the need for manual inquiries and disputes between supplier and buyer. Triple-entry accounting with a shared ledger lowers audit costs for A/R confirmation. It also reduces risks and costs for parties in supply chain finance (e.g., receivables financing).
2. Validation of fulfillment, billing, and payments can all be automated, relieving businesses of what today is an immensely wasteful manual process. Smart contracts are one way to achieve this, and they allow businesses to have shared and trusted rules for processing of transactions. Whether it’s validating invoices against POs or confirming that discounting and taxation is correct, smart contracts will lower costs for both parties.
3. Everyone with a role in the supply chain—from collections and procurement to AP and sales—wants to work in one application rather than logging into multiple application or portals. Integration will be critical for allowing invoices issued by a supplier to automatically be entered into the shared ledger and automatically put in the buyer’s AP system. Likewise, cash application can be automated when payment is made.
4. Smarter collections will accelerate cash flow to better leverage credit instruments and remove collections risks. Machine learning will provide deeper insight into the behavioral side of buyers. With machine learning, early discounts can be optimized for each buyer’s segment, and automated dunning and collections outsourcing can be optimized to improve DSO and reduce collections risks.
We’re entering into a new era. The digital supply chain is faster and more complex. To compete in this new era, companies will need new tools to be customer-centric, agile, and efficient. If you want to learn more, please contact me. If you want to contribute to this vision, Globys is hiring.
Ask about our products, experience, implementation, or anything else. Our data and adoption experts are here to help you find the best solution for you and your customers.
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