05 Apr 2014 Free white paper – Demystifying Supply Chain Finance
It has become a cliché. Since the global financial crisis of 2008, the combination of constrained liquidity – shortage of available credit – combined with very low interest rates and the emerging maturity of technology like eInvoicing has created a perfect storm. While cash rich buyers are getting paltry returns on their cash, they can see value in their supply chain. At the same time their suppliers are cash poor and eager for affordable and available sources of working capital. Indeed, the crisis of 2008 highlighted how critical the supply chain is to everybody.
Governments, concerned to stimulate industries, still punch drunk from the worst recession in living memory, are looking at ways of supporting small businesses who are operating under the constant threat of running out of cash. It’s a tragic irony that for many small businesses the worst thing that can happen to them is to see their order book grow.
In times of economic uncertainty, cash is king and the plight of smaller businesses has been made worse by their customers extending payment terms in order to bolster their own cash position.
This is why Supply Chain Finance (SCF) is a hot topic. But what is it exactly? Ask a dozen experts and you’ll get a dozen different answers. Some will lead you to believe that it can deliver the panacea to address our economic woes. Others will explain that far from being the solution, it’s part of the problem. And they’re both right. The fact is that SCF is a complex business field that encompasses a wide range of business strategies, financial products and technologies and it’s easy to be blinded by science.
The aim of this paper is to unravel the jargon, distil complex business issues into bite size pieces and attempt to demystify Supply Chain Finance.