Inclusive Supply Chain Finance

"Bridging the Gap - Synchronisation of the financial- and material flow within the supply Chain"

inclusive Supply Chain Finance

The Situation:

  • Buyer- Supplier relationship in a supply chain: goods are delivered by the supplier, the buyer is going to pay the invoice as late as possible to maintain his free liquidity
  • A supplier waits an average of 60 days to get paid during which its available liquidity is reduced: A major problem for small suppliers. Due to their small size, they often suffer from poor borrowing terms, even if they would urgently need access to capital.

Our Solution:

Functional diagram of Supply Chain Finance

Functional diagram of Supply Chain Finance
© Photo Fraunhofer IML

Functional diagram of Supply Chain Finance

  • Supply Chain Finance (SCF) is a relatively new instrument of Financial Supply Chain Management. SCF releases liquidity and creates benefits for all actors along the supply chain
  • Advantage: The supply chain gets faster access to money with better conditions
  • SCF is based on the principle of Reverse Factoring, the pre-financing of the liabilities of a buyer to its supplier by a financial service provider. The supplier benefits from the conditions that are based on the creditworthiness of the buyer, and is going to be a solvent and reliable partner.
  • Usually the process is automated via an electronic platform from, which can on-board a variety of suppliers. Therefore, SCF can be combined with other solutions from the Purchase-to-pay process, like eInvoicing.

Your Benefit:

Win-Win-Win-situation for suppliers, buying companies and banks

Win-Win-Win-situation
© Photo Fraunhofer IML

Win-Win-Win-situation for suppliers, buying companies and banks

eInvoicing and platforms as enabler for SCF

  • Increasing digitalization and automation of cash flows: material and cash flows approach to time.
  • With eInvoicing, processes run faster, more simplified and with lower costs.
  • Expenses for the preparation and handling of paper invoices cease.
  • eInvoice is uploaded to the platform and triggers additional process steps. Without digitized invoices there is no upload on the electronic platform possible.
  • Consolidation of all relevant information on the platform: transparency for stakeholders

→ If you are looking for competent support and advice, which combines the knowledge from research with practice and consider new technologies – please don’t hesitate to contact us!

SCF at Fraunhofer IML

Since the beginning of 2015, the research activities in SCF are executed in the new Center for Logistics and Mobility at the House of Logistics and Mobility near the Frankfurt airport. As an application-oriented research institute our work is based on practical solutions and methods that are developed together with our industrial partners.

We are part of the SCF Community, an European research network, which promotes the transnational development of best practices and standards. The SCF Community with Prof. Dr. Michael Henke as member of the board, is an independent organization based in the Netherlands. The network includes almost 1,000 members from business schools, industrial companies, service providers, banks and consultancies.

iSCF Conference in Frankfurt
© Photo Fraunhofer IML & innopay

iSCF Conference in Frankfurt

Inclusive Supply Chain Finance:

How to involve the whole ecosystem in a digital world?

 

Supply Chain Finance (SCF) is getting more important. It is about time that SCF is getting part of the omnipresent digital infrastructure and easier to access. Digital technologies, infrastructure and regulations in the field of invoicing, digital identity, block chain, risk management and cloud are a good base for the expansion of SCF. In this way the liquidity and efficiency of companies and other regulations will be improved. SCF is becoming an integrative concept that will bring benefits to the different segments by using a joint digital infrastructure.

This open space conference explores ways to make Supply Chain Finance accessible for all actors in the supply chain, so that a large part of the economy can benefit from the synchronization of material, information and financial flows.