In a global supply chain, each supplier, regardless of size, can form a critical link. But as trade tensions escalate and macroeconomic conditions worsen, global supply chains – and the suppliers that underly them – are looking increasingly vulnerable. If a link in the supply chain breaks, production lines can grind to a halt – a particular worry for the large buyers that sit atop this global process.
To foster stability across supply chains, and to help suppliers optimise their working capital, companies are increasingly turning to payables finance, a supply chain finance technique. Through payables finance, large corporate buyers can extend or maintain existing supply payment terms and suppliers can access financing at a rate that reflects the risk of its highly creditworthy buyer.
But as demand for payables finance grows, how is the industry adapting to meet it? Christian Hausherr, Chair, Global Supply Chain Finance Forum and Head of Product Management, Trade Finance and Supply Chain Finance, Deutsche Bank, explores in an article for TXF.
The article can be read here (behind paywall)
Speaking to GTNews to mark the publication’s 20th anniversary, BNY Mellon’s Dominic Broom, Global Head of Trade Business Development, and Bana Akkad Azhari, Head of Relationship Management for the Middle East and Africa and the Commonwealth of Independent States, trace the most noteworthy drivers of global trade over the past two decades – including China’s introduction into the World Trade Organisation, technology’s role in cutting costs and streamlining the physical supply chain, and post-crisis regulatory changes that have opened the gates to new non-bank trade financing market entrants – which all indicate a resilient and versatile trade industry.
The revolutionised trade landscape is not void of challenges however, with Broom underlining “sticking points” in the development of the financial supply chain, such as management of documentation and tighter regulatory requirements. Pointing to technology’s radical effect on trade so far, Azhari highlights how bank data can be developed into digital solutions to address these issues and to analyse key global trends in order to add value to the client experience – with Broom adding the importance of correspondent banking to best harness and leverage this data to enhance trade enterprise across the world.
To read the full article, please click here.