supply chain finance , auch: supply-chain finance , SCF (Abkürzung)
reverse factoring

“Win-win” is a term used by many in supply chain finance.

Supply Chain Finance practices have been in place for over a decade.

The driving forces behind the rapid growth of supply chain finance programs are:

But despite the imperfections, supply chain finance can be a useful tool for companies to help them and their suppliers.

So, as it moved its payment terms from 45 to 90 days, it looked into a mechanism called supply chain finance.

Supply chain finance is one of the topics of discussion at a recent industry roundtable meeting.

The main challenge when introducing supply chain finance is simply to get everybody on board, both internally at the buying company and among suppliers.

In reverse factoring or supply chain finance, the buyer sells their debt to the factor.

Those challenges in turn demonstrate why, for all the interest in supply chain finance, its application so far has been slower than expected.

In order for Supply Chain Finance to take off on a broad scale, a fresh impetus is needed.

A second programme, the Supply Chain Finance Facility, would also provide working capital to companies.

This is why, for smaller companies, we have a number of schemes in place to help them, including alternative payment schedules and offering supply chain finance.

The Supply Chain Finance structure is managed by large commercial banks providing the technology platform, services and funding.

Misys provides an integrated portfolio of trade and supply chain finance solutions that anticipate constantly changing market requirements.

Supply chain finance has even caught the eye of the Bank of England as it seeks to encourage lending in the real economy.

Supply chain finance may mean:

The structure that has exhibited the strongest growth rate is represented by independent third party supply chain finance providers offering multi-bank platforms.

The highest growth of supply chain finance programs currently originates from the US and Western Europe.

Supply chain finance is seen by many supply chain experts and managers as the great hope for easing problems with suppliers.

Bank payment obligation (BPO) is a class of settlement solution in international supply chain finance.

As a result, there is a need for global supply chain finance (GSCF) solutions.

Three distinctive Supply Chain Finance structures have crystallized.

Supply chain finance allows a supplier to sell its invoices to a bank at a discount as soon as they are approved by the buyer.

The benefits of Supply Chain Finance are:

Although Supply Chain Finance is experiencing significant growth in demand, financial institutions are focused mainly on the large buyer side of the trade equation.

Global supply-chain finance refers to the set of solutions available for financing specific goods and/or products as they move from origin to destination along the supply chain.

Reverse factoring, a.k.a. supply-chain finance (typically domestic)

After leaving the US Government, he worked as Vice President of Planning at Hostess Brands, a turnaround consumer food products company, responsible for Supply-Chain Finance, Forecasting and Planning.

The growing popularity of collaborative platforms is highlighted by the rise of TradeCard's supply chain collaboration platform, which connects multiple buyers and suppliers with financial institutions, enabling them to conduct automated supply-chain finance transactions.

The concept itself of the reverse factoring is not really original.

Often the reverse factoring is used with the dematerialization to speed the process.

The core principle of the reverse factoring is to have a way that benefits to all the actors.

By using the reverse factoring, these risks are materially reduced.

In reverse factoring or supply chain finance, the buyer sells their debt to the factor.

To fully understand how the reverse factoring process works, one needs to be familiar with the trade discount and the factoring.

In 2011, the reverse factoring market was still very small, accounting for less than 3% of the factoring market.

The reverse factoring method, still rare, is similar to the factoring insofar as it involves three actors: the ordering party, the supplier and the factor.

Reverse factoring is seen as an effective cash flow optimation tool for companies outsourcing large volume of services (e.g. clinical research activities by Pharmaceutical companies).

In the reverse factoring process, as it concerns validated invoices, as soon as the supplier receives the payment from the factor, he is protected.

In "reverse factoring", the intermediary buys only those accounts receivable that are from highly creditworthy buyers such as large multinationals (Kappler, 2004).

This can also be simplified and speeded by using a reverse factoring platform combined with digitalization of business transactions (i.e. EDI).

The reverse factoring permits to gather all the suppliers in one financier, and that way to pay one company instead of many, which eases the invoicing management.

Indeed, the reverse factoring could be considered as a combination of these two solutions, taking most advantages of both in order to redistribute the benefits to all three actors.

By taking part in the reverse factoring process, the factor realizes a benefit by making available cash to the supplier and supporting in its place the delays of payment.

Advanced payments, reverse factoring and credit rating information services are increasingly being used within eplatforms to support SMEs (e.g., Nafinsa, Coface, TradeCard, Project C).

The reverse factoring is very useful for small companies who have for clients large groups, because it creates a more durable business relation as the big company helps the smaller one, and doing so gets some extra money.

With the reverse factoring, instead of paying numerous suppliers, most of the invoices are centralized with the same factor; it is always better for the accounts department to deal with one company to pay than several.

Moreover, it ensures that the suppliers will be able to find advantaging financing in case of cash flow problem: using reverse factoring assures that the suppliers will still be in business, and are reliable.

The principal risk in reverse factoring is that the supplier gets trapped in a system where he cannot decide which invoices he need paid immediately or not, and therefore he becomes the victim of that system.

The relation with the suppliers benefiting of the reverse factoring is improved because they benefit from a better financing solution, and their payment delays are reduced; for its part, the ordering party will gain some extra money reversed by the factor and pay his invoices to the due date.

Unlike traditional factoring, where a supplier wants to finance his receivables, reverse factoring (or supply chain financing) is a financing solution initiated by the ordering party in order to help his suppliers to finance their receivables more easily and at a lower interest rate than what they would normally be offered.

As the whole goal of it is to make money available to the supplier as fast as possible, a lot of companies decide to dematerialize their invoices when they start a reverse factoring system, because that way it saves few more days, plus all the advantages of the dematerialization (less expensive, and benefic to the environment).