Smart contracts are simply the coded programs that automate transactions based on contractual terms. Similar to traditional contracts, smart contracts even depend on two parties accepting the terms. But a distributed ledger environment like the Blockchain manages these terms.
Hence it is of no surprise how a single distributed ledger technology revolutionizes Business 2 Business commercial dealings with smart contracts. Creating a digital buyer-seller relationship contract and placing the terms on a distributed ledger makes possible to automate everything right from order placement to account settlement, despite contractual complications.
OTC is significantly essential to all enterprise, a place wherein the commercial wheel knocks the revenue highways. Here the sales and marketing efforts not only turn into completed orders but also, ultimately receiving money into the bank. Moreover, it is even about delivering superior customer satisfaction. To sum up, smart contracts will entirely redesign traditional contracting and the order-to-cash (OTC) process; and at the same time defeat all the inefficiencies that most B2B organizations are facing currently.
Until now most large B2B organizations yet encounter significant challenges in the cross-functional processes of smart contracts and OTC, where inefficiencies or inaccuracies occur in total revenue. Due to lack of synchronization between product and price master data, along with incomplete calculations of discounts in off-invoice, bring in pricing discrepancies and customer invoice disputes. Extra manual efforts are required to manage and resolve such common scenarios. This further result is heavy delays in invoice settlement; enormous costs incurred on the collection, and has considerable negative effects on cash flows. Actually, many organizations spend about 60% of total OTC efforts in managing exceptions and resolving disputes caused by billing discrepancies.
Let’s just visualize a world where:
- Both product price and discount are simultaneously calculated automatically and accurately considering all available data.
- The visibility of all transactions is spread alike, totally recorded and authenticated in real-time, with complete audit track and cent-percent compliance.
- For first time and all times receivables are accurately generated, and requires no valuable people hours to be invested in analyzing and resolving pricing and invoicing disputes.
- Cash applications or deductions management no more needed.
- Accounts payment arrives on time and in full and requires no action from customers end.
Smart contracts may seem too good to be true, but actually the technology is all set to put them to reality. And hence very much convinced about it to be soon the new OTC standard for all advanced thinking organizations.