Supply Chain Finance Gains Ground as Funding Tool

Supply chain finance (SCF) is gaining ground as a funding tool for major companies, according to a survey by EuroFinance. More than one in four participating multinational corporations (MNCs) have a SCF programme in place, while almost as many are investigating, planning or implementing a programme.

According to the 245 companies that responded to the conference, training and research group’s emailed invitation, the key drivers for a supply chain finance (SCF) programme vary depending on the market. Extending payment terms (days’ payable outstanding or DPO) and improving working capital were cited as the most important drivers (34%), closely followed by better use of liquidity (31%).

Eighty per cent said that treasury plays a key role in setting up and managing an SCF programme, while 65% of the participants that had already a programme in place stated that treasury had taken the lead role in establishing the programme.

“In the wake of regulatory changes that are affecting funding globally, many larger corporates are taking a more active role in ensuring there is access to funding along complex global supply chains,” said Katharine Morton, editorial director of EuroFinance.

“Some corporates are taking on more of the risk embedded in their supply chains to extend financing or to improve terms, liquidity and their working capital positions. It can be complex to convince suppliers to get onboard, and it isn’t for all, but it’s very much a case of ‘watch this space’.”

The survey, part of the ‘5-click’ series by EuroFinance designed to gauge the opinion of the corporate treasury community on topical issues. The full report can be accessed at http://www.eurofinance.com/ectn

Commencing Wednesday 26 March through to Tuesday 1 April
gtnews
is publishing a new series of articles about SCF on the website’s
Financial Supply Chain
page.

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