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Supply Chain Financing: An Alternative to Bank Lending and Supplier Risk Management

The following article summarises the discussion during a roundtable event in January 2011 in Geneva, Switzerland, hosted by J.P.Morgan and chaired by Sebastian di Paola, Partner, Corporate Treasury Solutions Group, PwC.

Sebastian di Paola, PwC

Welcome, everyone. I would like to start by asking Kieran to give us an overview of what supply chain financing solutions look like. With a variety of products available, treasurers are sometimes a little confused about the difference between factoring, reverse factoring and supply financing. Can you help with this?

Kieran O’Regan, J.P. Morgan

Supply chain finance, as we know it today, has evolved since the late 1980s, initially in Spain,during a period of high inflation and interest rates.This environment created considerable challenges for corporates in terms of working capital and a high cost and constrained liquidity, resulting in the launch of a domestic product known as confirming.