Long-standing invoice and payment practices in asset-heavy and capital-intensive industries revolve around estimates and accruals for external financial reporting. The issues this creates are substantial, and without real-time numbers, it is impossible to ascertain an accurate, comprehensive visibility into spend and thus make informed business decisions based on a current position.
Further obscuring a profitable mindset, lack of data, inexact estimates, payment delays and elongated dispute and resolution cycles yield an impenetrability that hampers financial wellness.
As long as the disconnect prevails, the issues using estimates and accruals as foundational numbers will remain.
The solution to said woes exists in blockchain-powered and secured smart contracts.
The Antidote: Smart Contracts
By enabling counterparties in any commercial relationship to evolve beyond the stagnant, outmoded contracting model into an automated and certain one, smart contracts can fundamentally transform processes including access to real-time information and automating payments, making invoicing processes obsolete while enabling the ability to understand business performance in real-time.
In a smart contract, existing natural language contracts are essentially turned into code supported by blockchain’s immutable and distributed record-keeping capabilities. By tapping into operational field data, industrial internet of things (IIoT) connected devices and other information sources, real-time measurements are used to confirm pre-agreed terms of a contract have been satisfied. This means that instead of relying on estimates to book accruals, automated transactions support an immediacy that enables digestion of spend daily of desired.
Financial Visibility Realized
By deploying blockchain-powered smart contracts, siloed corporate views and rigid, outdated workflows that exacerbate transactional discord and prolong a lack of financial clarity can be overcome.
Moving to frictionless and certain smart contracts solve issues around speed, trust, accuracy and visibility in transactional relationships. After all, isn’t it about time that companies today understand exact costs as they unfold instead of depending on lagging invoice processes, payment delays and administratively-taxing dispute and reconciliation processes?