Financial Supply Chain 2017: Cubs and Uber and Blockchain, Oh My!

Spend Matters welcomes this guest post from Drew Hofler, senior director of financial supply chain solutions at SAP Ariba.

Innovation and change seem almost seasonal in the world of consumer payments, as new options and approaches pop up like dandelions in the spring. B2B payments, however, seem to occupy a parallel universe where time stands still and innovation is as likely as the Chicago Cubs winning a World Series.  

But the times, they are a changin’. The Cubs pulled off the seemingly impossible and snagged a championship after a 108-year drought. And innovations in the financial supply chain that seemed impossible only a few years ago are finally falling into place — and they promise to change the face of B2B payments. What can you expect to see in the year ahead? Here are four predictions.

B2B payments will get faster…

The current lag between the time an electronic payment is made and settled will go the way of the paper check, and money will move with the same speed as data, thanks to faster payments initiatives in the U.K. and Europe, the Same Day ACH that NACHA is rolling out and Real-Time Payments schema from the clearinghouse. This will enable companies to be more responsive, better able to forecast cash flows and increasingly nimble in their payments.

… and smarter

Business networks will deliver detailed information on payments and early visibility into when they will be made. These data-rich transactions will drive much greater transparency and enhance the entire procure-to-pay process.

Money will move like people…

Uber is among the most efficient ways of getting around. You order a ride, step out of the car at your destination and go on your way. Behind the scenes, you have already pre-verified your payment type and a trusted provider moves the money. No muss, no fuss.

B2B payments will soon move in the same effortless way through ecosystems created within business networks. Payments will be embedded in the procure-to-pay (P2P) process to the point where, just like Uber, you don’t even think about them. When pre-set conditions are met, payments are simply executed with all of the rich, detailed information behind them and shared with both buyers and suppliers to make settlement and reconciliation a snap.

and Blockchain will create a new mode of transportation

Earlier this year, ATB Financial completed one of the first international payment transactions utilizing Blockchain technology. The payment, which normally would have taken between two to six business days to process, was done in about 20 seconds.

This is amazing, not only because of the sheer speed with which the payment was processed but also because it has essentially created a new model for managing B2B payments. With each party that touches a B2B payment at each border crossing or currency exchange, more hands reach into the pot and more cost is added to the transaction. Blockchain eliminates these inefficiencies, intermediaries and costs, making B2B payments faster, more secure and less expensive.

We’ve entered a new era where, thanks to technology, not only does anything seem possible, it is possible. Organizations that embrace the innovations swirling around them can change the game, play it well and win.   

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