Blockchain

Supply Chain, Linked and Billed Via Blockchain

Even at its smoothest, supply chain management is never the easiest of endeavors.

Transparency is key, but often is lacking – in part because of far-flung parties, which include both sides of a transaction (buyer and seller, of course) that may be operating across time zones, languages and currencies. Frequently, there are intermediaries involved with financing.

Add to the equation the growing burdens of regulatory compliance stretching across anti-money laundering and know your customer efforts … and record-keeping can become daunting even with the best of efforts.

And then there’s always the paper trail, which bedevils any number of activities – chasing down invoices remains only a glaring, and tedious, example.

To that end, bBiller seeks to take out the “middlemen” of supply chain activity tied to finance and accounting.

The blockchain startup, which describes itself as a supply chain automated distributed autonomous organization (DAO) is gearing up for an ICO slated to begin in July of this year. Funds raised through that ICO will be under the governance of the tokenholders themselves, who in turn will vote on how those funds are spent. One token equals one vote, the company has said.

In terms of technology, bBiller has adopted ISO/IEC 19845, known as Universal Business Language, which it has said is applicable to any industry, adopted thus far across 65 countries. The company has said that decentralized document and billing processes can help reduce back office costs by as much as 30 percent, once improved data sharing processes are in place, and where payments via cryptocurrencies do not necessitate using bank accounts.

In an interview with PYMNTS, Stephen Rowlison, CEO of the Australian startup, noted that international supply chains can benefit from using blockchain as a conduit for suppliers and their customers to get instant updates on the status of payments (and invoices) via smart contracts.

Those smart contracts based on Ethereum blockchain, said the executive, can be used to satisfy and settle payment terms, liens and to ascertain invoice status.

“What we are putting on Ethereum blockchain is an ID … used for the parties that are involved in the transaction,” he told PYMNTS.

The problem in traditional accounting systems and document management is one “in how the data is distributed,” he said. “Most organizations will generate a business document that, of course, has information – to use a B2B example, an invoice – and that information needs to be transported and rekeyed, or reentered, unless there is some sort of EDI gateway between the two organizations that are compatible.

“The first issue there is to eliminate the need for any re-keying or data entry when a business document is transmitted to another party,” Rowlison continued – and, he noted, the documents themselves may be less than optimally constructed.

Manual processes are overlaid, in effect, on the manual processes that formed the document in the first place. Each organization may have a completely different interface, he said, for the capture of information tied to business activities and payments. One customer is on SAP, for example, and perhaps another firm is operating with QuickBooks.

Standardization eliminates the need to find a way for disparate systems to find a way to communicate or rip and replace what is already extant, he said.

Rowlison noted that at least some information would be transferred over private blockchain, a point that he said would be use case-specific and would capture data such as the payment amount, tax classifications, line items and “basic information the business would consider private and confidential to them.” There is no reason why an invoice cannot eventually be created by a machine, he said, and delivered through blockchain for a consummation of payment.

That machine-based eventuality can, of course, help with paper and manual process-intensive verticals, such as manufacturing, which is where paper receipts and checks abound, and where employees scan invoices and deliver them by mail or email for presentation for payment.

Rowlison told PYMNTS that some research shows one in three invoices contains an error, and that the cost incurred by firms to process an invoice globally can be between eight and 15 dollars. The goal of bBiller is to bring that tally down to $1.50 or less depending on volume, he told PYMNTS. He stated that the stage is set for more adoption of electronically-formatted invoices, spurred in part by government initiatives gaining traction in Denmark, Finland, Italy and the Philippines.

The cash flow cycle improves, too, as the manual inquiry is removed, he added, stretching from “Did you receive my invoice and has it been approved and what is the payment status?” Writ large, with the blockchain (and machine) based process, an invoice is received and then matched to a purchase order, when it can be paid automatically and the funds remitted immediately.

Rowlison told PYMNTS that the supply chain solutions will be funded through the initial coin offering. “The way this works is new,” he said.

The company has proposed a core software solution for distributed payments through digital wallets, supply chain, freight status reporting and distributed accounting systems. Supply chain partners in any industry, he said, can propose and ballot requirements that address their specific nuances. If the ballot is favorable, funds are allocated to the development and company operations.

“For example, a manufacturer may want to automatically generate invoices from robots on a production line. Such a use case could be funded by any number of customers/investors who also would benefit from this level of automation,” he told PYMNTS, noting that the software is sold on a fee-for-service basis, with profits returned to investors/customers via the blockchain.

Elsewhere in Cryptoland

Overnight, it seems, Mt. Gox sparked a selloff – and so did some other factors. There was the Google ban on crypto advertising. Mt. Gox trustees are selling bitcoin in a move to pay back the company’s creditors. Bitcoin traded as low as about $7,767 on Thursday before recovering to $8,173. The moves wiped out about $60 billion in market cap from the sector.

CoinDesk has said that selloffs are in the works, as implied by trading charts. Amid other bears: Allianz Global, which said through its head of global economics and strategy, Stefan Hofrichter, that intrinsic value is zero and “a bitcoin is a claim on nobody – in contrast to, for instance, sovereign bonds, equities or paper money – and it does not generate any income stream.”

Abroad, and as reported earlier this week, three crypto exchanges have reportedly been seized by the government in South Korea, Finance Magnates reported.

 

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