Supply Chain Finance is Gaining Ground as a Funding Tool, Large Corporates Say
Published: March 26, 2014
- More than one in four multinational corporations surveyed have a supply chain finance programme in place. One quarter are investigating, planning or implementing a programme
- Most companies who already have a SCF programme are looking to extend it even further
- Treasury is the driving force behind establishing and managing SCF programmes
London, UK – A recent survey by EuroFinance, the global specialists in treasury research and events, has revealed that 27% of the large companies polled have a supply chain finance programme in place. This is set to grow with a further 25% investigating, planning or implementing a programme.
According to the 245 respondents, the key drivers for a supply chain finance 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%).
80% said that treasury plays a key role in setting up and managing a supply chain finance programme. Some 65% of the participants that had already a programme in place stated that treasury had taken the lead role in establishing the programme.
Supply chain finance refers to a range of options for companies to ensure financing of products and goods – most typically using the credit of the largest company to get better terms for the smaller suppliers, or for using a range of technologies to improve payment terms. The survey was designed to understand the current position and future plans of companies supply chain finance programmes and the role played by treasury.
“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. 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’,” says Katharine Morton, Editorial Director of EuroFinance.