Benefits of Use of Blockchain in Procure to Pay (P2P)

The Procure-to-Pay (P2P) #p2p process encompasses the steps taken by an organisation #organisation to procure goods and services, starting from identifying a need for a product or service to the payment of the invoice. Blockchain #blockchain technology can introduce several improvements in the P2P process, offering transparency, security, and automation. Here are detailed use cases of blockchain in the P2P process:

1. Supplier Onboarding and Verification:

• Description: Blockchain can store and verify supplier credentials, ensuring that only legitimate and compliant suppliers are onboarded.
• Benefits: Reduces the risk of fraud #fraud , enhances trust #trust , and ensures compliance. Additionally, once a supplier is verified on one blockchain network, other companies (given permission) can leverage this information, reducing redundancy.

2. Purchase Order Creation and Approval:

• Description: Purchase orders (POs) #PO can be generated as smart contracts on a blockchain, ensuring that terms are automatically executed when conditions are met.
• Benefits: Automation of PO terms, reduced discrepancies, and time saved from manual approvals.

3. Goods Receipt and Validation:

• Description: IoT #IoT devices can send data to a blockchain when goods are received, automatically matching them with the corresponding PO.
• Benefits: Real-time visibility of shipments, reduction in paperwork, and instant discrepancy management.

4. Invoice Reconciliation:

• Description: Invoices can be compared against POs and goods receipts on the blockchain, automating the reconciliation process.
• Benefits: Reduction in invoice discrepancies, timely vendor payments, and fewer manual interventions.

5. Payment Automation with Smart Contracts:

• Description: Smart contracts can be set up to automatically release payments #payments to suppliers once all conditions (like successful goods receipt) are met.
• Benefits: Ensures timely payments, reduces manual processing, and strengthens supplier relationships.

6. Auditing and Compliance Tracking:

• Description: All transactions on the blockchain are time-stamped and immutable, making them perfect for auditing purposes.
• Benefits: Streamlined audit #audit processes, reduced fraud, and ensured regulatory compliance.

7. Supplier Performance Analysis:

• Description: Supplier interactions and performance #performance metrics can be stored on the blockchain, providing a transparent history of supplier reliability and efficiency.
• Benefits: Informed decision-making for future procurements, improved supplier negotiations, and strengthened vendor relationships.

8. Contract Management:

• Description: All terms and conditions of vendor contracts #contract can be stored on a blockchain, ensuring transparency and adherence.
• Benefits: Reduction in contractual disputes, automation of contract terms through smart contracts, and a secure record of all agreements.

9. Discount and Rebate Management:

• Description: Early payment discounts #discount , volume rebates #rebate , and other incentives can be automatically managed and executed using smart contracts.
• Benefits: Ensures that all applicable discounts are availed, automates rebate calculations, and reduces errors.

10. Supply Chain Financing:

• Description: Blockchain can facilitate quicker and more transparent supply chain financing #financing options by providing financiers with a clear view of a company's payable processes and goods receipt.
• Benefits: Improved liquidity for suppliers, reduction in financing rates, and enhanced trust for financiers.

11. Dispute Resolution:

• Description: Discrepancies in shipments, invoices, or contracts can be flagged on the blockchain and resolved using a predefined protocol.
• Benefits: Faster resolution of disputes #dispute , transparent communication, and reduction in administrative costs.

Incorporating blockchain into the Procure-to-Pay process can offer enhanced transparency, security, and efficiency, addressing many of the traditional #traditional pain #pain points in the process. However, for successful integration, it's essential to ensure interoperability with existing systems and gain buy-in from all stakeholders.