Trade finance is the lifeline of global companies as it helps to render the finances required to complete the deals between sellers and buyers for smooth sailing of the business. Liquidity, credibility, security, and ease of payment are the prime concerns of every organization indulged in international trading. Besides this, there are legalities to be fulfilled correctly, which involve heavy paperwork. Trade Finance Blockchain Services helps to overcome all such intricacies with ease.
Nowadays, as the popularity of cryptocurrencies is growing at a rapid pace, entrepreneurs are showing greater interest in using Blockchain in Trade Finance, as it helps to end unwanted intermediaries, clumsy paperwork, delays in the verification of transactions, and slow payment processing. Blockchain technology helps the involved parties to enter into the business relationship in a frictionless environment.
Let’s talk about the common issues with the current system of trading:
Today, there is no dearth of commercial blockchain applications that are being used for trade finance, and most of them are utilizing private blockchain. It helps in facilitating cross-border sales, in which there are four key participants, the buyer, seller, and bank accounts of both parties. While the main concern of a business is about receiving payment for the products that are sold and delivered to the customer, the customer is equally worried about paying for the product in advance which he never received.
The second problem is excessive documentation, such as confirmation of the order, bill generation, bill payment, information of dispatch, the expected time of delivery, confirmation of the delivery of the product, and then the request for feedback. All these processes are done smoothly and automatically through the private blockchain. Let’s understand how it’s done:
The key benefits of Blockchain in Trade Finance include
Blockchain ensures greater traceability of products in transition and is of great help to exporters and importers. Sometimes, transportation takes much more time than expected. It will be easier for the buyer and seller to have mutual trust and understanding, as the reason for unnecessary delay in the delivery of goods will be known to both parties. Isn’t it one of the biggest benefits of using the blockchain?
Blockchain is also referred to as Distributed Ledger Technology, which means that all transactions are recorded in the ledger that is in sync with all the involved parties involved in trade financing. Apart from this, the information about commercial agreements will also be visible to them, and cannot be tampered with by any single individual or entity. It eliminates the chances of distrust.
3. No Need for Audits
Trade Finance Blockchain Services helps to implement error-free smart contracts, which eliminates the need for auditing. Besides this, each detail of financial transactions is stored safely and cannot be erased or altered. Blockchain also simplifies verifying the authenticity of assets and reducing compliance expenditures.
4. Tight Security
Each transaction is cryptographically encrypted, and each piece of data and information is kept in a secured platform. It’s the most crucial point handled by the Blockchain in Trade Finance.
Blockchain helps to enhance the efficiency of trade finance as the transactions are done directly between the relevant parties, without any need to involve any third-party intermediaries. The use of smart contracts triggers business transactions automatically, thus, allowing streamlining the trade financing processes in a faster and more cost-effective way. Let’s see how it works:
Blockchain in Trade Finance benefits global businesses by reducing operational costs, improving efficiency, and ensuring transparency & traceability, making trustless payments, and offering tighter security.
Antier offers Trade Finance Blockchain Services which helps to end all your worries related to smart contract development challenges. Get in touch with industry experts for achieving an improved trade finance solution.