Vous êtes sur la page 1sur 3

The practical impossibility to perform

supplier onboarding compliant with


stringent KYC regulations prevents banks
from running Supply Chain Finance
programs1
Enrico Camerinelli, Finextra

MYTHS & FACTS


IN SUPPLY CHAIN FINANCE

FOLLOW
US
www.primerevenue.com
Copyright 2014 PrimeRevenue, Inc.

twitter.com/P
rimeRevenue

INTRODUCTION
Today, supply chains stretch across the globe with
multinational buyers on one side and a diverse
group of suppliers in numerous countries on the
other. Corporations are finding that the efficiency
gains they achieved through strategies such as
outsourcing and low cost country sourcing are
being eroded by the tremendous amounts of
working capital trapped in their extended supply
chains. Having made the leap from niche to
mainstream, Supply Chain Finance has become an
important tool in the battle to unlock working
capital, improving competitiveness and generating
billions of dollars in free cash flow for best in
class companies and their suppliers. Despite these
early successes, there remains a general lack of
knowledge regarding how Supply Chain Finance
works and how to effectively utilize it.
This whitepaper provides an overview of the most
common myths in Supply Chain Finance in order to
help
companies
maximize
the
enormous
opportunities available to them.
PrimeRevenue Inc. 2013

What is Supply Chain Finance?


Supply Chain Finance is a solution that helps meet corporate objectives including:
working capital, EBITA, reducing supply chain risks. It allows corporates to increase their
payment terms and/or provide the option to their suppliers to get paid early.

PAGE
www.primerevenue.com
Copyright 2014 PrimeRevenue, Inc.

Myths & Facts in Supply Chain Finance

MYTH 1.
FUNDING IS COMMITTED

FACT

NOT true. Funding is uncommitted. Every


funder can withdraw and stop financing at
any time.

One of the key characteristics of Supply Chain


Finance is that funding by the financial institutions
is actually uncommitted. This is due to the
accounting requirements: In order to avoid having
the buyers accounts payable being reclassified as
financial debt the funding is transactional and not
permanent.

their banking partners.

Many corporations have set up Supply Chain


Finance facilities in order to inject liquidity in their
supply chain, support and strengthen the longterm relationship with their suppliers. However,
having the bank reduce credit limits or stop funding
results in an increase in risk for corporations in
terms of supply chain disruption and a
deterioration of the relationship with their strategic
suppliers.

The fact of having uncommitted credit limits means


Myths &
in canSupply
Chain Finance
that aFacts
financial institution
reduce credit limits,
increase their funding spreads or in the worst case
withdraw completely from a Supply Chain Finance
program.
Although credit standings of obligors (buyers) have
not changed considerably, some funders may not
support Supply Chain Finance programs in the
same way as previous years before the crisis. In
some case corporations have felt the impact on
their supply chains and experienced a shortage of
liquidity. In the current market we see some
commercial banks reducing credit limits in Supply
Chain Finance programs and increasing their
funding spreads.

Most of todays market leaders take it a step


further and recognize the best solution to counter
these challenges is by allowing multiple funders to
pool their resources and fund supply chain
facilities through a multi-funding platform and
therefore diversify their sources of liquidity should
credit appetite diminish within one bank.

Unfortunately many companies had allowed their


programs to be funded in a monolithic structure,
without enough opportunity to switch between
different funders should problems arise with one of

PAGE
www.primerevenue.com
Copyright 2014 PrimeRevenue, Inc.

Vous aimerez peut-être aussi