Supply chain finance: Difference between revisions

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Supply chain finance (SCF) is an arrangement whereby a supplier of goods or services is able to obtain finance based on the existance of a receivable due from the purchaser of those goods of services.   
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.   


It 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.  
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==
==See also==
* [[Dynamic discounting]]
* [[Factoring]]
* [[Factoring]]
* [[Finance]]
* [[Forfaiting]]
* [[Invoice discounting]]
* [[Liquidity]]
* [[Market-based approaches to cash management and liquidity]]
* [[Non-recourse]]
* [[Payments and payment systems]]
* [[Physical supply chain]]
* [[Receivables]]
* [[Reverse factoring]]
* [[Risk mitigation]]
* [[Supply chain management]]
* [[Working capital]]




==Other links==
==Other resource==
*[http://www.treasurers.org/node/8986 ACT breakfast briefing: supply chain finance, May 2013]


*[http://www.treasurers.org/node/8745 Masterclass: Supply chain finance, The Treasurer, February 2013]
*[http://www.treasurers.org/node/8745 Masterclass: Supply chain finance, Will Spinney, The Treasurer]


[[Category:Trade_Finance]]
[[Category:Trade_finance]]

Latest revision as of 20:58, 4 July 2022

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


Other resource