Talk of bitcoin in the corporate treasury department continues to build, but it remains to be seen whether that talk will amount to true transformation of corporate finances — or mere, empty hype.
For some organizations, the decision to dabble in cryptocurrency may turn heads, but it may not necessarily represent the dramatic overhaul in payments or financial management that some might assume.
Case in point: Highclere Castle Spirits in February announced it had accepted a bitcoin payment from one if its distributors for the sale of 10 cases of its gin. What’s noteworthy about the transaction isn’t simply that a company is accepting a B2B payment in bitcoin. Rather, it’s that a company within the spirits industry — which is notorious for legacy and outdated processes — has leapfrogged its accounts receivable (AR) strategy so dramatically.
“The liquor industry is very, very behind as a whole,” Co-Founder and CEO Adam von Gootkin, told PYMNTS in an interview. “Sometimes, it feels like we’re operating in the ’50s and ’60s, literally. It’s old-school.”
As von Gootkin explained, the decision to accept a bitcoin B2B payment wasn’t necessarily about overhauling those old-fashioned workflows in favor of crypto. Rather, it was an effort to explore a technology that has the potential to drive digitization within the industry’s financial workflows — even if that digitization doesn’t materialize from cryptocurrency.
Rooted In Legacy Technology
According to von Gootkin, the liquor sector has faced particularly high challenges when it comes to modernization, not only in the financial back office.
“The current industry is slow to move,” he said. “It’s a very brick-and-mortar industry. It is still a warehouse-trucking-brick-and-mortar-store-restaurant model. You have spirits coming from all over the world, they go across on ships to warehouses, and trucks pick it up. There are paper trails everywhere.”
This is the physical side of the sector’s supply chain, and it’s not going to be easy to modernize. Regulatory restrictions are one significant factor that have hampered the industry’s ability to embrace an eCommerce model, although the pandemic has eased that barrier somewhat. Still, legacy strategies to facilitate B2B trade continue to be rooted in legacy tools and workflows.
But the financial side of the operation may have a broader opportunity to digitize. Paper checks and manual payment processing remain commonplace, making B2B payments the low-hanging fruit of digitization efforts. Von Gootkin said he wanted to embody the company’s legacy of history-making and innovation by embracing crypto, collaborating with one of its distributors to facilitate the transaction.
“While our brand is hundreds of years old and represents so much that is tradition, on the other hand, we have to be cutting-edge, totally embrace technology, and almost evolve into a technology company in some respects,” he noted.
A Symbolic Initiative
Von Gootkin explained that the company and its distributor, Heritage Wine and Spirits, collaborated to facilitate the transaction via Coinbase and are working on repeating the process for a larger transaction in the coming weeks. The technology is a tangible example of the benefits of cryptocurrency in the form of faster, more agile transactions, noted von Gootkin, and now has an opportunity to drive greater understanding of the technology that has historically been considered too risky for business.
Interestingly, however, he said this event does not necessarily mean Highclere Castle Spirits is diving into cryptocurrency, nor will it consider bitcoin or any other digital token its preferred method of receiving B2B payments from distributors.
Rather, the initiative is more of a “symbolic” effort to promote the opportunities that digitization in general may present to the industry.
Bitcoin isn’t necessarily an appropriate tool considering the high regulatory and tax burden of the sector, for instance (von Gootkin said that applicable taxes were paid in traditional fiat in this particular case). With that in mind, some may question what the purpose of the bitcoin payment was in the first place.
Although the act may not sporadically inspire the whole of the liquor industry to suddenly embrace cryptocurrency B2B payments, it could make less radical digital payment methods like ACH a bit less intimidating for a market that has so often relied on outdated checks. In the least, said von Gootkin, it could spur discussion about the opportunity to embrace technology.
“This gets the industry talking about how this could make some sense,” he explained. “I hope that by doing a transaction this simply, this is maybe a step in the right direction for thinking about how payments are made and how the industry is run. Let’s see if we can’t get everybody inspired to get more efficient and effective.”
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