Financing the Chain

As new services come to market, finance executives are taking a second look at supply-chain finance.

If buyers can gain better terms and a more stable vendor base, and suppliers can improve their cash flow and financial stability, the new supply-chain finance offerings may start to catch on more quickly. “It’s really about looking at how they can work together to take costs out of the supply chain,” says Sadlovska, “not just one party benefiting at the cost of the other party.”

Kate O’Sullivan is staff writer at CFO.

Just Browsing

Many companies are thinking about supply-chain-finance techniques, but few have firm processes or plans in place.

13%: Actively using SCF techniques

15%: Have firm plans to enhance SCF practices

41%: Investigating options

31%: No action taken

Source: Aberdeen Group

Worlds Apart

Many buyers and suppliers are still a long way from agreeing on how they can improve their supply-chain financing. As of last September, these were the top actions each side planned to take in the next 18 months to improve the financing of its supply chain.

Buyers Suppliers
51% — Negotiate price reductions with suppliers for early payment 67% — Implement a program that enables both streamlined transaction processing and access to financing
41% — Implement a scorecard system to track supplier performance 49% — Find a cheaper financing source
40% — Implement new technology for better automation and visibility 44% — Implement new technology for better automation and visibility
39% — Extend payment terms 37% — Obtain additional financing from a financial institution
32% — Implement a program that enables both streamlined transaction processing and access to financing 26% — Use purchase-order performance milestones to trigger buyer payment or export finance
Source: Aberdeen Group

Ahead of the Curve

Some of the techniques employed by companies that are actively managing their supply-chain finance:

  • Electronic invoice presentment and payment systems
  • Online payment platforms with automated discounting and invoice reconciliation
  • Online payment platforms with access to third-party financing

Source: Aberdeen Group

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