News & Events
Bank of England Report Substantiates Supply Chain Finance |
| 05 AUGUST 2010 |
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The Bank of England has published a report into the supply chain finance market, following discussions with a range of market experts (the supply chain finance working group), including Demica. Demica-led and industry wide reports have shown that corporations continue to face a number of hurdles - the unsustainable demand to extend payment terms, the looming threat of supplier failure and the withdrawal and rise in the cost of credit insurance. Above all, the tightening and lack of availability of credit has continued to create real liquidity problems for companies. As a solution to the situation, interest in Supply Chain Finance (SCF) techniques has been mounting to ease the burden.The Bank of England report, although focused on how Buyer Driven Receivables programmes could be used to expand the SCF market, identifies several key benefits and trends in the SCF market: SCF to help small to mid tier companies (or those with poor credit ratings) access credit
The report calls for a “technology platform…to bring together the payment mechanism and triggers”, highlighting that this can be provided by an independent solutions provider and suggests the platform should sit between buyer, supplier and the funding mechanism. Further to this, the management summary concludes that the SCF market would benefit from increased transparency and standardisation.
Demica’s SCF Citadel platform is perfectly placed to bring these elements together - tracking invoices, their performance and the funding in a consistent and transparent format, with information available to all parties. The supplier’s ledgers are captured on a daily basis, giving the financier and supplier an immediate view of invoice information at the item level. In effect, invoice records can easily be matched with payment records, making it possible to achieve total invoice transparency.
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