Multinational corporations and their cash-flow-starved suppliers are increasingly turning to supply chain finance (SCF) to increase working capital. A 2020 Gartner survey found that 23% of respondents claimed their business relied on supply chain finance solutions to improve cash flow and offer some steadiness in the pandemic-driven economy.
The COVID-19 pandemic, the emergence of sophisticated fintech solutions, the push by both buyers and sellers to maximize working capital, regulatory and legislative agendas that proposed tightening supplier payment windows, and several other factors are all contributing to the popularity of SCF.
The banking sector is also seeing an increase in supply chain finance (SCF) use. The 2008 global credit crisis made trade finance necessary. As supply chain liquidity became a significant concern for firms, there were more people looking for solutions. This grew as businesses sought to maintain liquidity and fueled an increase in demand for supply chain financing their edge in the market.
Here are the top eight criteria businesses should consider when selecting a successful, cutting-edge supply chain finance solutions to enhance their working capital position:
1. Offers an All-Inclusive End-to-End Solution
There are many different supply chain finance companies that serve varied demands. Still, only some, like Skyscend, provide a comprehensive solution that meets the needs of various industries and a wide range of sellers. Unlike fragmented and manual solutions, a solution that can facilitate numerous operations, such as invoice financing, reverse factoring, and dynamic discounting, can increase efficiency and payment speed. In addition, working capital requirements for businesses are continuously changing.
2. Provides a Variety of Funding Sources
A supply chain finance solution with several funding sources allows buyers to design a program closely matching their working capital requirements. A multi-funder network will enable businesses to access the balance sheets of their partner banks and other financial institutions, the customer (dynamic discounting programs), the SaaS company itself, or a mix of these.
For instance, a company might use its funds up to a particular limit or for specific suppliers and then employ third-party funds for larger cash flow requirements. We offer various funding sources and enable more flexibility regarding the costs sellers to pay to participate in an SCF program.
3. Delivers Useful Reports
Supply chain financing is increasingly regulated as governments and investors try to understand the dangers and potential long-term effects as it has become a more typical payment method for businesses globally. Companies are now faced with the challenge of correctly disclosing supply chain finance agreements in financial statements.
It is crucial to look for a system that offers in-depth analytics, reporting, and client credit monitoring because these features provide specific data and information that can easily give investors and legislators a better picture of a company's financial situation.
4. Promotes participation, diversity, and opportunity
For private businesses, governmental organizations, and charitable organizations, supplier diversity is a component of supply chain management that is becoming more and more crucial. Building a supply chain that ensures the inclusion of various groups in procurement strategies, such as women, minorities, LBGTQ, and veteran-owned firms, requires a solid commitment to supplier diversity.
Because diversified supply chains foster business expansion, a broader supplier pool, a better understanding of your client base, increased staff retention and recruitment, and driving innovation, it is crucial to inquire about the company's support of DEI efforts when looking at SCF solutions.
5. Protects Your Data and Maintains Compliance
Unfortunately, corporations all across the world are constantly concerned about data security. With the change to unforeseen work-from-home arrangements prompted by COVID-19 shutdowns that increased ransomware and data theft, this problem has become enormously more challenging for IT teams to tackle. Regulatory compliance is a problem that is equally urgent as security breaches. SCF platform providers are subject to increased scrutiny, just like any other provider of financial services or technology.
It's crucial to seek a solution with various built-in capabilities to safeguard your data while it's in transit and at rest while being compliant with laws. For buyers and sellers of different sizes in multiple industries, Supply chain finance has shown to be a useful tool for enhancing their liquidity and overall financial growth.
Conclusion
Skyscend Offers the best SCF Solutions for every type of enterprise. Our supply chain finance team helps businesses access trade and supply chain finance by collaborating with major lenders worldwide. Our global team is here to help you expand and take advantage of trade possibilities. From machinery specialists to soybean gurus, we have product specialists. We aim to assist you in locating the best trade finance solutions for your company because the required financing solution is frequently complex. Book a Demo to know more.
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