Supply-chain finance: The new frontier in the world of payments

Abstract

The new frontier of payments is called supply-chain finance
(SCF). The core idea behind this innovative concept is the use of
real-time supply-chain data to accelerate payments and help
suppliers get their money earlier. In particular, banks can be
linked up with buying organisations and leverage the information
about their approved suppliers’ invoices, one step before they
are converted into payments, to offer convenient financing to the
same suppliers. There are many reasons why SCF has been growing
at double-digit rates in the last five years. Through SCF, banks
move the risk of financing towards the stronger party in the
chain, ie the buyer. Despite the general credit crunch, SCF
mobilises financial resources for small vendors in a very
uncomplicated fashion. SCF improves the financial resilience of
the supply chain. Many financial institutions and third-party
providers have invested millions of dollars to build SCF systems.
While SCF is still an evolving industry trend, the early adopters
are already reaping the benefits.