Smart Contracts in Supply Chain Finance: Automating Accounts Payable and the Three-Way Match

Abstract

This paper examines how smart contracts can enhance accounts payable in supply chain finance by automating the three-way match.The conventional system relies on the manual verification of purchase orders, goods receipts, and invoices; hence, it usually causes delays and errors and is expensive.This paper has created a set of conceptual frameworks where blockchain technology is used to automate such processes.The outcomes are great improvements.The processing time is also cut down to approximately 1.5 or 2 days using smart contracts, compared with the manual systems of about 8-14 days.The per 1000 transactions cost is reduced to approximately 650 from 2000 by a wide margin of almost 40-70%.The error rate also reduces drastically from 9.5% to 1.3%, which is primarily through automated validation and elimination of manual data entry.Real-time data capture enhances transparency and accelerates reporting on finances.Certain issues are still there, including the reliability of the data, scaling of the system, and absence of clear legal and accounting standards.The analysis demonstrates that smart contracts can benefit the efficiency, accuracy, and control in the accounts payable process significantly.