The International Chamber of Commerce met on Oct. 21 for a session that was called a set of “intense talks” to finalize the first set of standardized supply chain finance definitions. After nine hours of discussion, the 11-member group prepared the terms for an initial draft that’s expected to be released to the industry in January 2016, according to GTR Trade Review.
The preliminary peer review was part of the chamber’s annual Supply Chain Financing Summit that took place in Paris. Delegates listened to a group of panelists who were part of the SCF terminology project. The goal of the SCF terms is to determine a system to regulate and synchronize market terminology for global supply chain finance products and services. Because there is often an inconsistency in language about financing of trade, the group was formed to set standardized terms.
Angela Koll, vice-president, product manager of international business at Commerzbank, “explained that the difficulty lay in the fact that most group members have very different terms for the same solutions, which vary according to different geographical jurisdictions,” according to the GTR Trade Review who was at the summit.
“Koll disclosed that finance terms were the first topic of conversation at the meeting. The panel discussed the financial supply chain and the physical supply chain, ‘under this we then discussed the different types of techniques like supplier finance, invoice discounting, pre-shipment, BPO, forfaiting, factoring: the whole host of supply chain finance terms,’ ” the report said.
In a PYMNTS.com article about regulating supply chain finance, Kah Chye Tan, chair of the ICC Banking Commission, explained the need to enact a more standard set of definitions in the industry. Because SCF hits a broad range of products, programs and solutions in the world of international trade, language consistencies is critical for the industry.
“SCF is a growing market with considerable business opportunities identified for the near future. Given increased collaboration among the wide range of bank and non-bank representatives facilitating domestic and cross border trade, and the advent of Internet and new communication technologies, it is more important than ever before for all market participants to adopt universally-accepted terminology that corresponds to the rich array of processing, financing and risk management techniques currently being developed by the industry to support increasingly globalized supply chains,” Tan said.
The first drafts of the documents are expected to be completed in December, when it will be sent to the peer committee for comments and review before being turned over to other institutions.