I first wrote about a new era of trade a few years ago to make the point that the period of optimizing supply chains for the lowest cost was over, and that companies needed to redesign them to achieve greater resiliency. That observation proved correct. Now we are hearing about “the end of globalization,” a hyperbolic phrase describing the effects of ongoing changes to the international political order that have been underway for more than a decade. These changes are forcing companies to make sometimes significant adjustments to sourcing and supply chain management. Globalization, which started in 1492, isn’t over, but managing international trade requires the ability to deal with shifts in strategic planning assumptions and agility in dealing with tactical events. Software will play an important role in enabling corporations to meet these ongoing challenges caused by a major reordering of global trade.
How payments are effected is an afterthought to many involved in a transaction, but flaws in this process can be a source of pain and frustration for those in the back office, especially in accounting and treasury. To improve the way payments are handled in business-to-business transactions, the once ubiquitous paper checks are giving way to electronic payments. This category includes credit, debit and virtual cards, wire transfers, as well as ACH (Automated Clearing House) transmissions that may be in the form of direct deposits, direct debits and electronic checks. Electronic payments are supplanting checks because they lower processing costs for both parties in a transaction; increase accuracy, auditability and control of the accounting; provide better visibility into payment status; and enable deeper insight into spend or customer metrics. Building on these digital advances, blockchain payment systems (BPS), now at an early stage in development and adoption, have significant potential in the market because they offer similar advantages at an even lower cost. I assert that by 2025, fewer than 20% of organizations will be using blockchain payment systems, but those that do will speed transactions, reduce overhead and cut costs.