The logical development of on-line exchanges is to integrate a company's supply chain through an exchange, thus enabling interaction with suppliers and external partners at each stage of the manufacturing process or service provision. This can enhance collaboration, speed up production and make it more responsive to customer demand. The ultimate goal for many companies is order-driven production. At first glance these new business models may appear to lie outside the scope or interest of the company finance department. For example, on-line purchasing and trading via exchanges are likely to increase the amount of business transacted with fewer suppliers, increasing credit risk exposure.
Settlement risk becomes more acute where transactions are taking place crossborder.
Related to this risk is the requirement for speed in the e-commerce environment. Identity and credit checking need to happen at the moment of the transaction, not after the event. A means to authenticate trading counterparties, as described above, is a vital requirement for successful e-commerce. Treasurers and bankers are addressing these issues and solutions are beginning to emerge. Online checks ensure the digital certificate is valid and current.