One of the hot topics over the past few years has been supply chain management and how various latest gen technologies are creating opportunities for the ecosystem participants to improve overall company operations. This improvement is not limited to the procurement and movement of goods, but encompasses potentially all touchpoints along the trail, which is continuous. There is also opportunity for the tech companies who provide services along the chain as well. In this piece, posted at Finextra, the author makes some good points about the financing opportunity that rests within the cash cycle.
‘Banks and supply chain finance (SCF) companies provide credit to customers that show credit worthiness and good payment behaviour. Information on the business and payments needs to be with people making the credit decisions. The information needs to be constantly updated so changes to the financials, both positive and negative, can be factored into an on-going credit facility.’
We provide ongoing coverage of developments in the SCF space, also releasing a recent report titled recently covered the space in a report titled Supply Chain Finance Market Review. The author in this referenced article makes the point that an estimated $2 trillion is tied up in short term assets that can be accessed and financed with the proper technology. This is related to capturing and using transactional information, as we have also pointed out in our Outlook for commercial payments.
‘One of the key answers is timely and comprehensive information arriving at the right time and for the right hands. This information comes from two areas, credit reporting agencies and payment records from banks, and increasingly from business networks such as Alibaba and Ariba. These areas need to be married up and artificially intelligence (AI) added to help police the behaviour needed to support the credit criteria.’
Whilst the author is senior at one of the supply chain solution providers, he is not selling anything. Just making sense.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
