What we call supply chain finance is generally based on reverse factoring schemes. In fact, analyst Enrico Camerinelli told delegates at the Supply Chain Finance Summit in London that we should also consider traditional factoring to be part of the SCF world.
Many traditional factoring organizations are now looking at extended their range of services to more sophisticated SCF schemes. But to extend the value of supply chain finance to smaller suppliers particularly means moving into the area of pre-invoice finance.
This of course, is problematic for traditional suppliers such as banks as they have little or no visibility of the supply chain in question. But that is starting to change, said Camerinelli.
A lot of work is now being done in the area of dynamic supply risk management. In particular, there are organizations building risk profiles to enable pre-invoice finance to be priced just as insurance companies price policies based on risk profiles.
When such profiles are available, they could have a significant impact on liquidity in areas of the supply chain that are simply not reached at the moment.
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