Trust between existing and future business partners

If you’re searching for a restaurant or place to stay, it’s easy to read other people’s feedback on Tripadvisor or some such, then decide whether to go with that provider or take your business elsewhere.

But there aren’t services that help you identify the most stable, reliable and trustworthy business partners. And even if there were, unlike consumer services, you’d have to ensure that the gathered data was real and based on past transactions, to avoid false evaluations and misinformation resulting in business damages.

Trust is at the heart of conducting business, with existing and future partners. On a fundamental level, you need to believe that the other business is going to uphold its end of the deal — providing the right materials or products; delivering goods on time; paying within the requested time frame; and so on.

Blockchain technology, if used properly, can help strengthen trust and ensure transparency. By using permanently confined historical data to review past business transactions of both parties and authenticate everyone involved in a deal, blockchain ensures trustworthiness.

Trust issues

Most businesses don’t have proper coverage against the various business risks involved when transacting with known and unknown partners, mainly because it would be impractical and too costly (e.g. bank guarantees, factoring, …), to protect against these risks on a repeating basis — for each transaction.

Did you know that SMEs dealing with large enterprises are faced with unequal bargaining power, which exposes them to shorter client payment periods and longer supplier payment periods? And if you discovered that a future partner uses its structural power to impose unlawful terms, would you still want to do business together? Probably not.

Source: http://www.eulerhermes.com/economic-research/blog/EconomicPublications/payment-periods-in-europe-wide-gaps-economic-outlook-apr12.pdf