Global Supply Chain Finance Exec: Global Growth Ahead

Supply chain finance has been growing in two ways: beyond big banks and in complexity. As firms take advantage of technology and Big Data to find out just how their cash cycles trend — on a day-to-day (and hour-to-hour) basis — the stage is set for increased adoption of financing light years beyond the traditional invoice and 30-day credit systems of yore.

Kendall Stevens, CEO of Global Supply Chain Finance, based in Switzerland, told PYMNTS the stage is being set for adoption of supply chain financing as a business tool that extends far beyond “stop-gap” or emergency measures.

Late payments may be an immediate concern that drives companies to supply chain financing, but Stevens said there are other drivers in place that transcend the cash cycle.

“As the world grows more globalized and markets are maturing, organizations are increasingly looking for ways to maintain and grow their market share,” Stevens told PYMNTS. “Customer financing programs, also known as distribution financing, have emerged as an effective tool for incentivizing buyers to purchase more product from sellers offering longer payment terms.”

And, Stevens said, extended payment terms are proving to be highly valued by buyers across the supply chain (and across borders) as they offer what is tantamount to a “debt-free source of working capital financing,” which can help enterprises grow their business. And sellers benefit, too, as they capture incremental sales without incurring additional risk to their own balance sheets.

The supply chain financing arena has evolved over the past few years, Stevens continued, and has over that timeframe been seeing increased participation of what he described as “non-banking funders as liquidity providers” throughout the industry. That marks a bit of a sea change, said the executive, as previously, liquidity assurance was almost purely the province of commercial banks.

For Global Supply Chain Finance, Stevens noted that his firm will look to launch “some large-sized programs” later this year, with an eye on growing existing partnerships.

One recent push toward increased scale: The announcement last month that the Swiss company and Euler Hermes World Agency have launched a joint global sales effort to grow supply chain financing. With Euler as an existing primary insurer, Global Supply Chain Finance is now able to leverage that relationship to bring financing solutions to the insurer’s existing client base.

Scale is important to the company, Stevens said, as Global Supply Chain Finance services companies across 95 jurisdictions globally. “We seek partners that can support the diverse geographic footprint of our clients,” he said.

Certainly, there’s room for growth. As noted back in April of this year, the supply chain finance market is growing at a heady pace. As a report that month by BCR Publishing found, the growth rate for the industry tops 30 percent annually. That implies that the industry is worth as much as $47 billion, when measured by the funds that are currently in use.

Key drivers, the report found, include the advantages offered by technology, which has been changing the landscape for both suppliers and the lenders they rely upon. Technology advances have included, and continue to include, the growth in e-invoicing and cloud-based technologies, which help keep pace with transactions in real time and feed information about financing needs in a quick and efficient manner.