Know more about the FCIreverse's cost-effective solution.

11 Mar 2019

In the upcoming weeks, we will be publishing a series of articles explaining the reasons to join FCIreverse and the range of benefits for financial institutions, buyers and suppliers. This week's article focuses on FCIreverse's cost-effective solution and how it can even provide additional revenue opportunities.

2. A cost-effective solution

As well as investments in technology, banks and factoring companies face numerous costs when setting up a multinational supply chain finance business. KYC procedures and local laws for perfecting title to receivables have cost implications, as does the need for local language documentation.

The good news is that many of these costs can be avoided with FCIreverse. The partnership model used by FCIreverse is more cost-effective than standalone supply chain finance. This means that cost need not be an obstacle, enabling funders to set up programmes in FCIreverse instead of – or as well as – using an in-house solution.

Here’s how FCIreverse can minimise costs and even provide additional revenue opportunities:

  • No need for a large investment. For banks using FCIreverse, there’s no need for additional IT tools – this plug-and-play platform can be used by FCI members with a simple, standard integration model that costs less than building, acquiring or white labelling. FCIreverse is powered by Demica’s award-winning platform, making it easy for banks to collaborate with other members and onboard buyers and suppliers anywhere in the world.
  • Lower legal costs. Programmes which are set up using the FCIreverse platform can be documented using the platform’s proven inter-factor structure, while members can also use their own standard Supplier / Receivables Purchase Agreement (RPA) for suppliers under local law.
  • Import factors can earn revenue. In a typical multi-funder programme, the buyer’s bank is positioned as a funder in specific jurisdictions and to specific suppliers, with other funders appointed for as many other jurisdictions as the platform can offer. But with FCIreverse, the buyer’s bank continues to enjoy the value of the relationship: managing the programme, overseeing the appointment of local supplier onboarding correspondents and earning a share of the fees in all locations.
  • Buyers and suppliers benefit too. Likewise, FCIreverse brings opportunities for buyers to achieve higher supplier participation rates for their supply chain finance programmes, leading to higher working capital benefits for both buyers and suppliers.

What’s more, lower costs mean you can reach more suppliers. Supply chain finance programmes often focus on the top 20% of buyer spend and do not include challenging jurisdictions or the long tail of smaller suppliers – not least because the costs associated with reaching these suppliers tend to be higher. With FCIreverse, lower programme implementation costs mean there’s no barrier to onboarding smaller suppliers.

The bottom line: with FCIreverse, cost need no longer be an obstacle to setting up a cross-border supply chain finance business – even when the focus is likely to be on smaller suppliers.