Supply chain financing takes off

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The squeeze on normal lines of credit appears to be prompting financial directors to seek alternative ways of raising finance and to free up working capital. According to findings from a report by Demica on supply chain finance (SCF), many finance directors are now looking to supply chain financing initiatives to plug the gap. The research states that corporations report a 65 per cent increase in live SCF programmes compared with a year ago.

Nine out of ten major international banks are now offering their corporate customers SCF solutions. SCF structures not only allow large corporations to extend their credit terms with suppliers, but also to use the credit quality of their payables to allow their banking partner to finance their suppliers’ outstanding invoices at a favourable rate.

But essential to the success of such initiatives is the management of information across the chain and the documents and data that support such financial flows. Any automation in the purchase-to-pay business process can only help the efficient flow of both the physical and financial supply chain, aiding buyers and suppliers. This is where e-invoicing can play a key part in automating supply chain processes. Yet strangely, the uptake of e-invoicing in Europe has been very slow to date.

Perhaps the credit squeeze will precipitate the use of e-invoicing, going hand in hand with the keen development of the financial supply chain.

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