Supply Chain Finance (SCF) is emerging as a core initiative to unlock the trapped financial resources within supply chains and mitigate the concentration of financial risks. Effectively implemented, it provides competitive advantage and financial certainty to the involved supply chain members. The innovative financial instruments offered under the SCF umbrella manage and steer the financial flows while keeping them aligned with the material and information flows in the supply chain. These instruments result in a win-win situation for the involved members by improving their Net Working Capital (NWC) and liquidity, strengthening their relationships with the supply chain members and reducing the probability of their bankruptcy.
The guide primarily explores the prospects for businesses to tap into the field of SCF. Due to the numerous variations in SCF instruments and related programmes, this guide intends to create a consistent taxonomy of the SCF archetypes that practitioners can use to adopt a particular type of SCF instrument. In order to facilitate the adoption of SCF by businesses, each categorised instrument in the archetype is analysed to provide a detailed view of the underlying mechanisms and characteristics. Practitioners can use the knowledge attained from this guide to adopt SCF either by getting on-board on an SCF programme offered by members of the supply chain, or by offering SCF instruments to other supply chain members. The practitioners will be able to draw a parallel between SCF offerings and their individual financial benefits and requirements, leading to informed decisions related to the offering and acceptance of SCF. Lastly, based on the provided analysis, practitioners can further explore and analyse SCF instruments based on their individual strengths, requirements and skill set.
This guide starts with the context and background of SCF, followed by defining the SCF archetypes. The SCF archetypes section is followed by a detailed analysis of SCF instruments in a particular archetype. Finally, SCF instruments are analysed by presenting their deployment mechanism and characteristics.