It's been said that money makes the world go 'round. Too bad that, when it comes to sealing international transactions, the world itself seems to move faster than the money does.

Innovative global distribution and information services have sped up the procurement, shipment, and distribution of goods. Yet for all the high-tech tools available to global business, the financial component of most transactions largely remains a manual process tangled in paper.

The physical parts of the global supply chain can be managed electronically. But once a purchase is made and a bill of lading cut, the electronic component of the transaction usually ends. Invoicing and payment, as well as authorizing ancillary financial services, are typically handled manually.

The dearth of business-to-business (B2B) electronic payment tools is a serious bottleneck. For instance, we know that through conventional methods, a company shipping goods C.O.D. (cash on delivery) can expect to wait up to two weeks to receive payment—and that's within the U.S. market alone. Imagine the wait to get paid for goods shipped halfway around the world and when bills and payments are handled in different currencies.

But lag time in payment is just one problem. According to industry research, a biller spends, on average, $3.45 to cut an invoice manually. It costs the payer $0.60 to pay it manually. Most of those costs are related to labor and processing.

Approximately 95 percent of all bills in the B2B world are paid repetitively, thus lending themselves to streamlined, standardized automation. But e-finance tools aren't sufficiently embedded in the system to take advantage of this repetition's great scale. As a result, the paper trail lives on.

That's the bad news. The good news is that a modern-day supply chain model built on lightning-fast transaction speeds is emerging to make traditional billing and payment systems obsolete. That model integrates online payment tools into the global movement of goods—and just as important, the movement of information about those goods—and weaves them tightly into a Web-enabled platform.

Why is this important? Today, all economic activity flows along three tributaries—goods, information, and funds. Tomorrow, the three no longer will be thought of as independent streams. Instead, they'll blend into one confluence of commerce.

As they do, deep shifts in business are likely to make themselves known. For instance:

• The false distinction between B2B and business-to-consumer (B2C) will fall away to a broader point of view that might be called "B2Me." In other words, transactions will be handled on a more personalized, customized level among all parties involved, with the same principles of trust, timeliness, and transparency expected by consumer and business alike.
• Saving customers' time will become a competitive battlefront.
• The preoccupation with "the last mile" of e-commerce—cementing the fulfillment gap where the virtual and physical worlds collide—will give way to concern over "the last minute" of the supply chain.

These trends toward seamless, personalized convenience in commerce have great bearing on how capital will be treated in the future. In a demand-driven supply chain, inefficiencies are doomed as every link comes under scrutiny.

According to Killen Research, three-fourths of all bill payments will be made electronically within five years. If this happens, companies of every size and description will either develop Internet-based payment and receivables capabilities or have a third party do it for them. Just as buyers expect to order and accept goods online, they'll expect to be billed and pay in a digital format. And just as sellers expect to take orders and book shipments online, they'll expect to get funds digitally too.

The streamlining of the supply chain's financial transactions will likely be felt most in international commerce. Less-developed countries have taken quickly to the Internet because this technology offers a leapfrog solution to problems of lagging infrastructure. Like cell-phone technology in countries with poor landline infrastructure, Internet-based financial controls bring smaller companies or countries into instant parity with large, established trading partners.

The Internet also can bring order to the global-settlements network, with its chaos of conflicting currencies, uneven technologies, and disparate payment systems. Consider that most online transactions in the United States are conducted by credit card; yet there are B2B instances overseas where plastic won't work. In some Latin American countries, for instance, credit cards can't be legally used for any cross-border transaction.

The Internet will be the great leveler. In fact, we foresee a giant global trading network where Web-enabled applications will be used to settle transactions in real-time, regardless of currency.

Clearly, e-business is already driving quantum leaps in product and data velocity. But the Internet's impact on the velocity of money is just now being understood. We only know two things for sure: How fast a company receives payment mirrors its ability to stay competitive; and, as layers of global supply chains are stripped back, the buffers between biller and payer—and between buyer and seller—will dissolve.

We built the UPS Capital model to address these new realities, keeping several basic precepts in mind. First, payment isn't made until a product is delivered (and our core competency is the worldwide delivery of 13.5 million shipments each day). Second, we collect data on approximately 80 percent of the shipments that move across our global system. And third, package delivery accounts for only six percent of the typical large company's supply chain spending, so there's plenty of room to bring efficiencies to other links in the chain.

UPS Capital's mission is to deliver capital to sellers at the point of sale and to provide financing options to buyers at the point of purchase—all the way through to settlement. The catalyst sparking this process is the simple digital signature, captured at destination, that confirms receipt of the goods we deliver. From there, financial processes can move at the speed of light, not along a primitive paper chain. A company shipping c.o.d., for example, can receive its funds within two days post-delivery instead of two weeks. (See the accompanying graphic.)

Through this Internet-enabled process, it will soon be customary for a manufacturer in Chicago, for example, to authorize payment at the precise moment his goods are delivered and signed for in Amsterdam. A digital signature will routinely trigger a real-time transfer of funds into the shipper's pre-selected bank account. Consignees will have a wide range of financing alternatives, such as equipment leasing, credit insurance, or asset-based lending—all of which will be instantly activated by that same digital signature. And the shipper (biller) and consignee (bill payer) will routinely resolve payment disputes before money changes hands.

All of these activities will be done at significantly reduced costs—for the biller, an 80-percent reduction in the cost of invoicing; for the bill payer, a decline in payment-processing costs until they approach zero. Money will still make the world go 'round—but with a speed and efficiency never before experienced.