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Explaining Blockchain Invoice Processing - A Quick Overview

Oct 21, 2022  |  Bakhtain Afzal

Businesses can automate their business processes while keeping them safe and open by using blockchain technology. 

So far, blockchain has changed many industries, but the payments and finance industries have been behind the hype. As the world is becoming more digital. The payments industry is now bringing in use technologies that make the payment process easier. 

Keep reading to find out more about blockchain invoice processing and how it works. 

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Explaining Blockchain

Before jumping straight into blockchain invoice processing, let’s start with blockchain.

Blockchain is a distributed ledger system. Made up of blocks that each keep track of a transaction, are perfect for reconciling payments. You can store documents in a decentralized blockchain network. Where multiple users can access it and change it at the same time, with a record of who did what and when.

It remains unchanged and this is clear. Using cryptography, there's a link between each record or block, and kept safe. All transactions are visible to all parties, so there is no need for a middleman.

What Is Blockchain Invoicing?

With blockchain invoice processing, a customer can send payments directly to a business's digital wallet. Transactions are easy to track and keep an eye on, and the blockchain makes it possible to get the full history of exchange.

How Do Payments Work on Blockchain?

Here’s where we get to the basics of blockchain invoice processing and how it works. Let’s take an example here which uses the Stellar network. Suppose you pay a French friend $5,000 from the US. Both of your banks are linked to Stellar, and here's how the payment would work:

For example, you'll send that friend of yours $5000. Right after that, the bank will notify her and after approval, there's an acceptance for the transaction. And, the same amount is deducted from your bank account now. 

The $5,000 will convert to Stellar Lumens in your bank's pool account (XLM).

The Stellar Network will convert Stellar Lumens into Euros at the best rate.

Your friend's French bank account will get Euros.

Stellar "Anchors" are banks. Stellar Network "Anchors" keep deposits and issue credits as needed. All currency transactions occur in credit issued by Stellar Network Anchors (except XLM).

What Helps Record Invoicing and Payment Automatically in Blockchain?

Blockchain technology automates customer-to-business transactions.

To understand this, each block and record is encrypted, and all transactions are transparent to all parties. This means that no middleman is needed.

As a supplier, you'll get faxed or emailed purchase orders. When you agree on pricing, you must file the order and dispatch it. After that, start processing the customer's due-date invoice.

Discrepancies in the product received by the customer or the amount paid require multiple layers of sorting and talking. During the transaction, human error is possible.