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SCF is alive and kicking – even after Greensill

The SCF Community 22nd June webinar on “The Future of Supply Chain Finance: Life after Greensill” chaired by Mike Hewitt and sponsored by Taulia had some of the key players in the SCF business:

  • Sean Edwards - Chairman, ITFA
  • Michiel Steeman - Executive Director, SCF Community
  • Simone Del Guerra - Global Co-Head Working Capital Solutions, and CEO UniCredit Factoring, UniCredit
  • Chris Southworth - Secretary General, ICC United Kingdom, ICC
  • Bob Glotfelty - VP of Growth, Taulia, Inc.

discussing the health of the SCF industry and whether the demise of Greensill had made any impact.

Overall conclusions

Not surprisingly the panel were optimistic about the prospects for the SCF industry, comments included:

  • SCF has passed the market disruption and survival test,
  • There has been no contagion from the demise of Greensill due to the buffer with the market
  • The need for a clearer definition of what SCF is and for a greater definition of the standards has grown
  • SCF is now a mature and resilient market that is introducing new technologies and digitising worldwide
  • COVID-19 boosted SCF globally and is growing, e.g. in the last 12 months it has grown 27% in Italy
  • There is a growing trend for Environmental, Social and Governance (ES&G) and SCF programmes to overlap/be integrated with ESG programmes
  • The future of SCF is great (Taulia).

Other topics discussed

Who is going to fill the space left by Greensill?

  • It will be filled with a mixture of fintechs and banks
  • Small banks can move into this space if partner with fintechs.

How SCF could become an asset class……..? (Not covered in much detail or resolved.)

Accounting standards

  • will probably become tougher and SCF usage could reduce
  • according to Sean Edwards new standards will definitely become tougher but he believes that (thankfully) SCF will NOT be reclassified debt
  • recent S&P paper recommended that if credit terms were more than 90 days it should be classified as debt.

Why use SCF ‘one-liners’

Hewitt asked the panel: “What would be your one-liner comment when talking to your CFO?” Answers were very varied and interesting:

  • SCF is a force for good by increasing ESG, helping small businesses and providing support of the whole supply chain
  • SCF optimises working capital while making the supply chain more stable and sustainable
  • SCF is a practical, simple form of financing trade, try it, and if using SCF already, use it as a way of scaling up
  • Think through what is the importance of the supply chain to your company in terms of its integrity/viability AND how you can treat your suppliers fairly
  • For supply chain managers: You need to work out how you can use SCF to create strong and sustainable supply chains.

CTMfile take: This was an interesting and useful webinar, but it:

  • Did not clarify that:
    • Greensill was a finance provider, not a technology platform
    • One of the key lessons from the Greensill debacle is that corporates need to keep their fintech SCF provider separate from their funder, i.e. not take both from the same provider
  • Nor did it resolve the five questions corporates should ask themselves – see CTMfile here

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