Supply chain finance: Difference between revisions
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imported>Doug Williamson (Added link to Treasurer's Handbook) |
imported>Doug Williamson (Expand. Source: Global supply chain finance forum.) |
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Simply defined, supply chain finance (SCF) is an arrangement whereby: | |||
*A supplier of goods or services is able to obtain finance | |||
*Based on the existence of a receivable due from the purchaser of those goods or services. | |||
If the arrangement is [[non-recourse]] to the supplier then the funding will be based on the credit standing of the purchaser. | If the arrangement is [[non-recourse]] to the supplier then the funding will be based on the credit standing of the purchaser. | ||
In this simple sense, supply chain finance is a form of [[invoice discounting]], but is usually distinguished by the fact that there is a well structured scheme or arrangement to facilitate that invoice discounting, very often involving electronic invoicing, record keeping or communication. | |||
Defined more broadly, supply chain finance can be viewed as: | |||
*The use of financing and risk mitigation techniques | |||
*To improve the management of the working capital and liquidity invested in supply chain processes and transactions. | |||
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* [[Dynamic discounting]] | * [[Dynamic discounting]] | ||
* [[Factoring]] | * [[Factoring]] | ||
* [[Finance]] | |||
* [[Invoice discounting]] | |||
* [[Liquidity]] | |||
* [[Non-recourse]] | |||
* [[Payments and payment systems]] | * [[Payments and payment systems]] | ||
* [[Receivables]] | |||
* [[Risk mitigation]] | |||
* [[Supply chain management]] | * [[Supply chain management]] | ||
* [[Working capital]] | |||
* [[Market-based approaches to cash management and liquidity]] | * [[Market-based approaches to cash management and liquidity]] | ||
Revision as of 09:26, 20 June 2016
Simply defined, supply chain finance (SCF) is an arrangement whereby:
- A supplier of goods or services is able to obtain finance
- Based on the existence of a receivable due from the purchaser of those goods or services.
If the arrangement is non-recourse to the supplier then the funding will be based on the credit standing of the purchaser.
In this simple sense, supply chain finance is a form of invoice discounting, but is usually distinguished by the fact that there is a well structured scheme or arrangement to facilitate that invoice discounting, very often involving electronic invoicing, record keeping or communication.
Defined more broadly, supply chain finance can be viewed as:
- The use of financing and risk mitigation techniques
- To improve the management of the working capital and liquidity invested in supply chain processes and transactions.
See also
- Dynamic discounting
- Factoring
- Finance
- Invoice discounting
- Liquidity
- Non-recourse
- Payments and payment systems
- Receivables
- Risk mitigation
- Supply chain management
- Working capital
- Market-based approaches to cash management and liquidity
