How Blockchain Can Transform the Procure-to-Pay Process?

Have you ever wondered about the various applications of blockchain? The truth is, it has numerous use cases and can be implemented in almost every industry. One such use case is in the procurement lifecycle of any enterprise, known as "Procure to Pay" and it requires blockchain innovation for several reasons. Blockchain technology can address inefficiencies in the PTP cycle, such as manual processes, duplicate data, and the need for reconciliation when two businesses engage in a transaction that involves the exchange of services and money.

The inefficiency of the P2P process:

The peer-to-peer (P2P) process can typically be time-consuming and problematic for both sellers and buyers. They often operate within separate ecosystems and use their own Enterprise Resource Planning (ERP) systems, making the P2P process less appealing for trading parties. The data transmission is not instantaneous, leading to inconsistent outcomes in procurement. Additionally, all transactions occur through a centralised process, resulting in buyers and sellers having to pay taxes.

In what ways can blockchain revolutionise the procure-to-pay process?

Blockchain is a public ledger that is decentralised and distributed, making it challenging to forge, breach, or steal information. It enhances transaction and information security since the blocks are interconnected through cryptographic hash functions.

Blockchain Solutions for P2P Process:

Procure-to-pay, also known as P2P, is the structured set of steps involved in the procurement and financial processes for purchasing goods and services. The conventional approach to P2P has certain limitations, and a blockchain-based P2P solution is a perfect option for streamlining the related procedures.

Implementing a blockchain-based P2P process can result in a speedy purchase order management process, along with the necessary precision, security, and operational efficiency.

Improved Business Liquidity:

Employing a blockchain-based B2P system for procure-to-pay can offer stakeholders instantaneous access to a database that stores all pertinent pre-verified information. All purchase orders issued by the procurer would be posted on the blockchain, and the supplier would have immediate visibility into them. Upon receiving the supplies, the procurer would confirm receipt of goods on the blockchain platform.

The system eliminates the need for manual procurement verification by providing all necessary pre-verified information on the blockchain, It enhances the supplier's liquidity.

Expanding the procurement network:

Procurement can be challenging for businesses of all sizes but can become particularly problematic for larger enterprises. Finding the appropriate vendor can be difficult, especially when there is an urgent procurement requirement. Failing to identify the right vendor can lead to expensive purchasing.

A procure-to-pay (B2P blockchain solution) can aid companies in identifying the appropriate supplier in significantly less time. The technology fosters collaboration between various enterprises to establish a shared database for procurement purposes.

Managing the risk of unauthorised access:

In most companies, the supply chain transactions go unnoticed, leading to inefficiencies due to gaps between procurement processes. Additionally, the system must address various security threats and attacks. However, a blockchain-based B2P solution for procure-to-pay can efficiently address these concerns.

By accessing a vast database that caters to various companies, the system verifies and authenticates vendors. As a permission system, it prevents instances of information breaches and allows management to maintain constant surveillance.

Adherence to regulations

Globalisation has resulted in increasingly complex compliance requirements for P2P processes. Companies with global operations must consider the regulations of numerous countries. However, a B2P blockchain solution for the P2P process can ensure compliance through the use of smart contracts, which automates the system and makes it entirely reliable. This eliminates the need for manual compliance efforts, reducing the risk of costly errors.

The immutability feature of blockchain serves as evidence of the process. Recording all data and procedures of a company in an immutable blockchain creates an audit trail for regulators. The technology enables regulators to have read-only, real-time access to the organisation's supply chains, practically eliminating the possibility of non-compliance.

Procedures to a paperless format

Implementing blockchain technology in P2P can lead to the elimination or reduction of paperwork. By recording everything on a distributed ledger that is accessible to everyone on the network, the need for a paper trail is eliminated.

The use of blockchain in procurement can eliminate the need for paperwork in the authorization and authentication process.

Saving Time and Reduce Costs

By replacing human executives with automated smart contracts, processing time can be significantly reduced, and accuracy improved in procurement. This helps companies to decrease the number of human resources required, leading to a reduction in expenses under the salary head.

Businesses can also benefit from cost savings on ancillary expenses, such as workstation setup and other support systems. The money saved can be redirected towards expanding products and services, research and development, or improving the quality of goods. Ultimately, this can strengthen a company's position in the market over the long term.

Conclusion: Blockchain Solution for Procure-to-pay Process at Redblox

The use of blockchain technology has the potential to revolutionise the P2P process by offering improved transparency, security, and transactional efficiency. In addition, blockchain can reduce the workload of streamlining by automating the exchange of information in procurement.

Our company utilises blockchain technology in the entire spectrum of P2P processes, including invoice scanning and processing, data management, funds management, and timely payment. Our blockchain-based procurement to Pay (P2P) solutionaims to minimise value leakage and lower the cost of operations, resulting in significant business value for our clients.