What is Financial Supply Chain Management?

Purchase to Pay, P2P and Dynamic DiscountingHistorically, the management of cash (treasury management) has been very distinct from purchasing and supply chain management. The former was very much within the domain of the accountant whereas supply chain management was trucks and sheds – the opposite end of the business. Technology has allowed that situation to evolve and as purchasing professionals are now embracing the whole of the purchase to pay process so are treasury managers appreciating the connection between cash management and supplier relationship management.

The term Financial Supply Chain Management mirrors the concept of Supply Chain Management. It recognizes that there is a chain of dependent events that has an impact on the working capital of an organization. On the buy-side, the timing of purchases, inventory, payment terms with suppliers and discount arrangements all impact working capital. The management of that chain of events (in so far as finance can influence them) is part of Financial Supply Chain Management.