Blockchain isn't getting attention just for its association with cryptocurrency

Blockchain isn't getting attention just for its association with cryptocurrency, it's also changing the world of data and business in the process. Here's how blockchain will play an impacting role in the world of finance and business transactions.

When your typical Joe or Jane off the street is asked about cryptocurrencies and the blockchain, many of them have a "deer caught in headlights" look. This is largely new territory for a lot of people, and even among those who are a little more knowledgeable, they're likely more familiar with the "gold rush" phenomenon of chasing cryptocurrency gains, or trying to turn a fortune from mining.

But the real power and potential for radically changing the world for the better will not be found in the fluctuating nature of a cryptocurrency’s prevailing value on the open market. Instead, it comes from the underlying blockchain technology, and how it can be applied to an increasingly broad range of business situations. One terrific example of this is invoice financing.

How Does Invoice Financing Work?
Let's say Buyer A decides to buy $1,000 in widgets from Company B. The payment terms for that order are such that Buyer A should pay Company B within 45 days. Meanwhile, Company B is running into some temporary cash flow issues and needs to have some more cash on hand right now. So, Company B "sells" the invoice for that order to Lender C.

There are a few different scenarios that all fall under the umbrella of invoice financing here. One possible example is that Lender C inspects and verifies the invoice associated with that order, and decides to lend $800 to Company B, based on the assumption that Company B has a legitimate accounts receivable of $1,000 from Buyer A. When Buyer A finally pays that invoice a few weeks later, Company B can then repay Lender C on the $800 loan, plus interest and fees.