The recent epidemic has impacted every link in the supply chain finance, from the source of raw materials to the final consumer. The majority of businesses worldwide are having their organizational, financial, operational, and commercial resilience put to the test. For many companies, COVID-19 has identified risks and resiliency deficiencies.
As a result, 70 percent of CEOs believe they will raise investment in disruption detection and innovation processes to get an advantage over competitors when it comes to disruption and innovation.
Global Business Intelligence recently spoke with international traders about their supply chain financing initiatives and uncovered some significant new trends. Companies care far more about controlling inventory and working capital since they must manage their supply chains globally to compete.
Additional factors are driving financial supply chain management. Businesses are rapidly expanding their planned direct imports and international purchases. Since many companies accrue in-transit inventory at some point abroad, this has significant balance sheet consequences.
Latest trends in Supply Chain Finance
The business landscape is drastically changing. The two main significant developments in a volatile business environment are automation and the volume of data. In this digital age, the business process has undergone a significant mutation. As a result, supply chain Finance is becoming more and more pervasive throughout the sector. Here are six new trends for financial leadership in the Supply Chain.
1. Procurement Order Difficulty
While suppliers want wider access to offshore capital, pre-shipment financing has historically been considered solely the supplier's duty and the purview of regional Asian banks. However, some banks are active in this market and provide working capital facilities for important suppliers using buyer master purchase orders.
2. The workforce is changing
Over 1,500 new businesses entered the market in 2020, of which 650 failed because they could not meet their financial obligations. India is currently experiencing rapid company growth as a considerable number of startups register. It will be simpler to expand the business if employees are educated on the startups' financial and technological aspects. The latest developments in the digital world enable workers to grow their businesses more successfully.
3. Increasing concerns
Finance executives will inevitably confront additional obstacles as their companies expand, from handling tasks in the complex economic climate to running their companies globally.
A financial officer is expected to manage budgeting efficiently, for example, as zero-based budgeting is an increasing concern in most firms. Lean management is a newer trend, so steps in to help overcome such a hurdle. Concerns about zero-based budgeting can be eliminated if professionals ensure that lean management is adopted and used inside the firm.
4. Paying for Work in Progress
We identified a small number of major banks (often regional or international ones) that have Master Purchase Order contracts with medium-sized to big Tier 1 and 2 suppliers and buyer support programs that have delivered on their end of the bargain for many years.
5. Invoices accepted by the buyer
This post-shipment financing scheme fundamentally functions as follows: Bank finances overseas supplier advance payments from buyer-accepted invoices. In order to make approved payables that are both date and value definite available to their suppliers, buyer connects their AP or debtor ledgers to the Bank's cash flow platform.
The supply chain finance structure is becoming more open account-based as the market shifts away from documentary-based trading. As a result, the moment has come for your business to change.
6. Establishing regulations
Due to evolving legislation, finance employees struggle with difficulties like compliance, identifying talent gaps, and legal trouble. But these difficulties with rule-setting can be overcome if rules are written down clearly and concisely by dissecting them methodically. Both company revenue and staff productivity will increase as a result. In addition, the firms will undoubtedly benefit if these rules are developed using a combination of technologies. This requires a thorough understanding of the policy and the alignment of the financial procedures with it.
Conclusion
The industrial sector has placed a lot of emphasis on financial supply chain management in the 21st century as it works to improve process efficiency and defend itself from margin pressure. Globalized supply chains, which benefit from purchasing from lower-cost economies, have been the most widespread endeavor over the past five years.
Supply chain finance is a collection of technological solutions and services that connects suppliers, buyers, and financial organizations via service providers to maximize transparency, financing costs, availability, and cash delivery upon one or more supply chain events.
Being the leading Supply Chain Finance platform in India, Skyscend is aware of the difficulties in maintaining a business. It is challenging to handle payables, receivables, and other operations without enough cash flow. Therefore, we Provide Supply Chain Finance to Businesses, SMBs, MSMEs, Retailers, and Distributors.