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Coping with Supply Chain Finance’s increasing range of options and complexity

The range of SCF providers is growing almost monthly. The excellent TXF wall chart Guide to Supply Chain Finance Providers published in early 2016 shows the dynamics and elements of SCF, but omits major players, e.g C2FO, Basware, as the scene is moving so fast. It is hard to keep up with developments as all cash management banks, and an increasing number of fintechs, now offer some form of invoice backed financing.

Don’t forget Purchase Order based financing

One major problem with invoices is that they are at the end of the business transaction. The starting point is the issuance of a formal PO by the buyer and which could deliver 50% of the finance 8-9 months before invoice financing. The new Purchase Order Finance platform from SMECapitalFinance in the UK, which is supported by a range of investors, shows how to help your suppliers much earlier in the business transaction.

Ongoing SCF transformation

The PAYPERS newly released report on B2B Fintech: Payments, Supply Chain Finance & E-Invoicing Guide 2017 describes recent developments and issues:

  • Orbian on “The do’s and don’ts of starting a successful supply chain finance programme”
    • Choose a bank agnostic financing model
    • In the execution phase. Executing a well structured, well-managed SCF programme that involves multiple suppliers and multiple jurisdictions funded with multiple sources is the that requires dedication and concentration to get everything right, getting the message to the suppliers right
    • Be sure that “whoever is providing it to them is going to have the financial resources on an ongoing basis”
    • when choosing partners make sure that they can execute a global programme seamlessly, from a single point of integration AND are able to bring in financing sources from around the world, without impacting individual suppliers or requiring individual supplier to enter a contract with individual sources of financing
  • Logistics companies are now moving on from providing inventory financing to considering exploiting the whole SCF market which is why Supply Chain Finance Community launched, in 2016, a 2-years pan- European project aimed at supporting the development of SCF schemes among logistics companies
  • International Chamber of Commerce with a number of the parties has formed a Global Supply Chain Finance Forum to develop common standard definitions for SCF and SCF-related techniques.

CTMfile take: The technology around SCF and the corporate value proposition is quite simple, the issue for corporates is which of the increasing range of different  suppliers would be best in the short and long term? The growing number of logistics firms providing various forms of financing for the supply chain further complicates.

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This item appears in the following sections:
Dynamic Discounting
Factoring
Invoice Discounting & Securitization

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