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

Eugenio Cavenaghi

Journal of Payments Strategy & Systems, 2014, vol. 7, issue 4, 290-293

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.

Keywords: supply-chain finance; supply chain; financing; receivables; payables; transaction banking; buyer; supplier (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jpss00:y:2014:v:7:i:4:p:290-293

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