Supply Chain Finance
Supply Chain Finance: The Anti-CrunchExecutive Report: 2009Author: Cesca Wakefield
Reverse factoring, inverse factoring, vendor finance, payables financing and supply chain finance (SCF) - are we talking about the same thing? What is SCF and how is it different from the financial supply chain?
In the current precarious climate, companies are extending days payable outstanding (DPO) to maximise working capital and free up cash flow, but this risks squeezing suppliers to the limit.
With buyers taking longer to pay suppliers, this is impacting heavily on the latter’s working capital / access to cash - to meet wage bills, fund new growth projects. Traditionally, it has been costly for suppliers to use credit line methods, such as factoring, as their credit rating or cost of borrowing has rarely been as competitive as that of the buyer’s. As an aside, suppliers often take this cost of financing into account in their pricing, so buyers can actually end up paying over the odds due to the existing payment system.
Supply chain finance offers a neat, win-win alternative in advancing early payment to the supplier through a third-party financial institution, with the buyer not required to pay back until the full – or even extended – term of DPO. Amongst a host of benefits, credit arbitrage is key to supply chain finance.
In this report:
- Supply Chain Finance,
- Introduction
- SCF in detail
- External partners
- Design and Implementation
- Future Developments for SCF
- Provider Directory
- Financial Institutions
- Technology Providers
- Consultancies
- Case studies
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