With the market for payables finance – and the understanding of it – evolving all the time, Deutsche Bank has released a revised and updated guide that seeks not only to factor in the latest developments, but also to re-evaluate the key questions that define the industry. What is payables finance and where does it fit into the wider universe of supply chain finance techniques? What is driving demand for these solutions? How do the physical and financial supply chains interact? And how do you go about setting up a successful programme?
“Payables Finance A guide to working capital optimisation” can be read here.
The news was covered by: Business Money, Trade Finance Global International Trade Magazine, TRF news, TXF, The global treasurer
The Global Supply Chain Finance Forum – an initiative comprising the ICC Banking Commission, BAFT, EBA, FCI and ITFA – has appointed Christian Hausherr, European Product Head of Supply Chain Finance at Deutsche Bank, as its Chair.
The GSCFF was established in 2014 to develop, publish and champion a set of commonly agreed standard market definitions for Supply Chain Finance. In turn, Hausherr – as a recognised expert in the field of SCF – has taken a leading role in the drafting of the GSCFF’s Standard Definitions for Techniques of Supply Chain Finance, as well as the Wolfsberg/ICC/BAFT Trade Finance Principles.
The news was covered by GTR, TXF, TRF News, Supply Chain Digital, SCF Briefing, Finextra, Fintech Finance, Financial IT, Fintech Insight.
In an article for Documentary Credit World, Olivier Paul, ICC Banking Commission Head of Policy, explains that banks are increasingly embracing supply chain finance solutions and digitalisation of the trade finance sector.
Expanding on findings from the ICC’s 10th Global Survey on Trade Finance, Paul says that the overall outlook for trade finance generally, and supply chain finance specifically, is one of growth and optimism, despite regulatory and compliance concerns.
The full article can be read in the June edition of Documentary Credit World, pages 22-24.
In an article for Treasury Management International, ICC Banking Commission’s Head of Policy Olivier Paul expands on results from the ICC’s 10th Global Survey on Trade Finance.
Findings from the survey, which gathered responses from over 250 banks in 91 countries, revealed that while traditional trade finance provision is on the up, there is now a corresponding growth in SCF. What’s more, most banks are taking steps towards embracing digitalisation, with over 60% of respondents indicating they have implemented or are in the process of implementing technology solutions as part of their trade finance processes.
The full article can be read here.
Before its eventual collapse, Carillion mislabelled its financial liability to banks as “owed to creditors” rather than “borrowing”. According to the UK parliamentary committee investigating its demise, this allowed the company to avoid negatively affecting its debt-to-equity ratio and to prolong its survival.
In a recent statement, Mar Beltran, senior director and lead for Infrastructure for EMEA at S&P Global Ratings, explained that Carillion’s extensive use of the U.K. Government’s supply chain finance (SCF) scheme was largely culpable for hiding the company’s fragile financial status – and that companies should look to adopt more transparent accounting practices.
The news was covered in Partnerships Bulletin, FM World, Credit Strategy, FM Industry, City AM and Construction Manager.
In an increasingly competitive supply chain finance ecosystem – consisting of banks, non-banks, and a combination of the two – what makes a payables finance programme ‘successful’? And how can corporate treasurers select an effective provider?
Writing in TMI, Anil Walia, Deutsche Bank’s Head of Financial Supply Chain, EMEA, suggests that corporates should base their search for an effective provider on three simple criteria: Is the payables finance programme easy to set up (and how is technology facilitating this)? Can the provider successfully on-board suppliers across all relevant geographies (and how is technology being used to make this more efficient)? And perhaps most importantly, is the offering structurally sound and sustainable?
Even as emerging new technologies, such as blockchain and artificial intelligence, continue to broaden the current and future options available to corporate treasurers, Walia argues the “fundamental questions a corporate must ask of their provider remain the same”.
To read the full article, please click here.
Deutsche Bank has been voted Asia-Pacific’s best supply chain finance provider by an independent survey conducted by East & Partners Asia, a leading specialist market research firm in the corporate and investment banking markets, in collaboration with Corporate Treasurer magazine.
The “Voice of the 1000” surveyed the region’s top 1,000 institutions, as measured by annual revenues, in each of the following country markets: China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand.
Carmen Chan, Regional Head of Financial Supply Chain Asia, Global Transaction Banking, Deutsche Bank: “We have worked hard on growing our supply chain finance business in Asia, specifically with respect to payables finance, with a keen focus on excellent service predicated by a strong local presence, efficient onboarding, a global-friendly platform, and a cross-border funding model. This recognition, from the region’s leading treasurers and chief financial officers, is quantitative proof that our approach is working, and we are delighted.”
Full results can be found at Corporate Treasurer’s website here.
When faced with the choice of cash to fund a corporate finance strategy or cash to meet a 30-day supplier schedule, the revenue-generating activity will obviously be more alluring. However, while extending payment terms makes it possible to grow cash mountains, what happens if the supplier goes out of business while they wait?
Enter payables finance – a buyer-led supply chain finance technique through which sellers in a buyer’s supply chain can receive the discounted value of its receivables (represented by outstanding invoices) before the due date, and typically at a more attractive rate than it could normally obtain (the financing cost is aligned with the higher credit rating of the buyer).
Two decades since the birth of the payables finance business, the market has grown rapidly – both in terms of size and scope. At Deutsche Bank, payables finance has become the fastest growing business line within the trade finance product family. Moreover, while, dominance still resides largely with five or six global banks, a new generation of non-bank platform providers have also significantly increased their share of the market – advertising enhanced digital interfaces, simplified implementation processes, and new business models (such as those focusing on smaller suppliers, offering auction based solutions, and those incorporating dynamic discounting).
Deutsche Bank’s new publication, “Payables Finance: A guide to working capital optimisation”, which brings together experts from across the supply chain landscape, sets out to explain the progress of this remarkable business to its current position as a core supply chain management and working capital tool – and to address its potential going forward.
Significantly, the publication defines exactly what makes a successful payables finance programme in an increasingly complex ecosystem of buyers, providers, and financiers and explains how payables finance is helping to bridge the US$1.5trn shortfall in global trade finance (as reported by the Asian Development Bank).
To read more, please click here
Supply chain finance (SCF) has evolved considerably in the last 15 years. In the early 2000s, bank revenues from SCF services only represented a very small proportion of the total trade finance business. And the wider SCF landscape comprised only a handful of banks implementing payables finance programmes for their largest corporate clients.
Today, appreciation of the benefits offered by SCF is growing. However, there is still room for growth. Indeed, according to McKinsey research undertaken in 2015, only 10% of the industry’s potential revenue pool is currently being met.
Commenting in BCR’s World Supply Chain Finance Report 2018, UniCredit’s global co-head of trade finance, Adeline de Metz, argues technology could play a key role in helping to unlock SCF’s potential moving forward.
“New solutions are being developed to enhance the speed, efficiency and transparency of trade settlement. Blockchain technology is now starting to bear fruit, with the likes of we.trade promising to improve the protection, management and tracking of transactions by aggregating the processes of whole supply chains on a single blockchain register, accessible via an intuitive digital platform”.
De Metz added; “the incoming generation of digital platforms are also helping to remove the geographical and financial barriers to participation in SCF. More and more small suppliers are now gaining access to SCF even when they are based in locations previously too remote for this kind of programme.”
To read the article in full, see p.27-29 of the World Supply Chain Finance Report 2018.
Speaking at BCR’s 2018 Supply Chain Finance Summit, Angela Koll, Specialist, Trade & Supply Chain Finance at Commerzbank, offers her views in this year’s edition of the Supply Chain Finance Report, which accompanies the event. On pages 27-28, Koll highlights the value that the Bank Payment Obligation (BPO) can bring to the industry.