Demica latest report shows that Supply Chain Finance (SCF) average annual growth rates of between 30% and 40% at major international banks. Not only, the SCF market is expected to continue to expand strongly to the end of the decade, although the pace of growth will moderate to 20-30% per annum by 2015, and 10% per annum by 2020. Demica's research, conducted among global banks and a qualitative sample of international corporates, illustrates the climbing demand for this supplier finance facility and its increasingly significant role in banks' trade finance portfolios.

Demica, who is experiencing unprecedented demand for their SCF offerings, believe that the intensified competition will standardise and commoditise the domestic SCF service offering.

Moreover, many banks predict that in five years, domestic SCF will be a necessity for corporates, although cross-border SCF may be more complicated to implement. The report highlights issues such as local legislation, multi-regime compliance and marketing the advantages of SCF in different jurisdictions as being the main hurdles to implementing cross-border SCF transactions.

EBA SCF Market Guide
The European Banking Association has just released a 'Supply Chain Finance EBA European market guide' by Charles Bryant and Enrico Camerinelli which is a product of the EBA Supply Chain Working Group. This studious report focuses on providing a common basis for the EBA community to understand the ecosystem of supply chains (physical and financial) and the market opportunities for SCF services.

It contains an important summary chart of the supply chain finance portfolio:

Source & Copyright©2013 - C Bryant & Enrico Camerinelli, Aite Group

SCF solutions from TMS suppliers
A growing number of TMS suppliers provide some form of SCF solutions. Kyriba, a leading supplier of TMS solutions in the cloud, have been providing a Supply Chain Finance service since early 2012 to help corporate finance teams improve cash and working capital optimization. The Kyriba Supply Chain Finance features a supply chain finance solution that includes both Payables Financing (reverse factoring) and Dynamic Discounting.

 

Kyriba's SCF solution is used by, Auchan the large French retailer, in a multi-bank solution for suppliers in Spain, France and Holland. Auchan choose whether credit for the early payment is provided by banks or Auchan. (Kyriba's SCF solution is also white-labelled by Société Génerale as part of their supply chain finance offering.)

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All types of asset based financing are becoming much more popular with banks and other financial institutions as they struggle with on balance sheet financing. If you don't offer your suppliers some form of supply chain financing, when will you? the integration of supply chain finance with TMS makes it even easier.