Pre Shipment or Purchase Order Finance– can anyone Deliver the Goods? – Part II

- December 18, 2014 4:55 AM | Categories: ,

We know purchase order financing is a tough nut to crack. There are two vendors out there that offer or are attempting to offer solutions, so it’s worth a brief look at how they are doing. SWIFTs Bank Payment Obligation (BPO) The BPO is an irrevocable undertaking issued by a buyer’s bank to the seller’s bank that is settled by a successful matching of transaction data. SWIFT developed a data matching tool between banks and wrapped rules that have been sanctioned by the International Chamber of Commerce. SWIFT sees an opportunity to use this new payment mechanism to inject pre […]

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Pre Shipment or Purchase Order Finance– can anyone Deliver the Goods? – Part I

- December 17, 2014 5:49 AM | Categories: ,

The talk about supply chain finance and in particular new ways of financing commercial transactions, be they international or domestic, has mostly just been that, talk. Almost all of the developments we hear around vendors, networks, and early payment revolve around post shipment , approved invoice financing, what I call the easy stuff. If suppliers waited to get funded until the invoice was approved, many small suppliers (and potentially even some larger ones!) would have cash flow challenges and difficulty obtaining further financing. How would they order raw materials? Or pay contract labor? Finding ways to finance deeper in the […]

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Why Did Lending Club Go To Market so Fast and Other Asset Creators Struggle?

- December 16, 2014 2:27 AM | Categories:

Was the Lending Club just in the right place at the right time? For sure, a whole bunch of secular trends have gone their way, including the financial meltdown, bank regulation, improved data analytics and processing power, greater public comfort with online finance and most likely excellent management. But, perhaps most of all, LendingClub got to grow up while interest rates are at historic lows and investors are just so hungry for assets that yield more than a few basis points.  In this case, the assets Lending Club creates are consumer and business loans. Why have others that have been […]

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On–Demand, Event Triggered Finance With Network Models – A Game Changer?

Trade Financing Matters - Free White Paper Download
The talk about supply chain finance and in particular new ways of financing commercial transactions, be they international or domestic, has mostly just been that, talk. Most of the developments have been around financing suppliers off an approved buyer invoice, which makes the risk easier to manage. Could on-demand, event triggered finance with network models be the ultimate game changer? Find out with this new, downloadable paper from Trade Financing Matters.

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Why Banks have Undue Influence on How They are Regulated

- December 15, 2014 5:17 AM | Categories:

As Simon Johnson from the Baseline Scenario points out, banks, and in particular, Citigroup have huge amount of political power. Why? Well, when most of your alum run important financial agencies or are members of the Fed Reserve or Treasury that works in your favor. Or as we all know, setting the fox to guard the henhouse leads to a big conflict of interest. Senator Warren articulated this beautifully in a speech last week before Congress on how much power Wall Street has. “Mr. President, in recent years, many Wall Street institutions have exerted extraordinary influence in Washington’s corridors of […]

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The Basics of Islamic Finance – Part I

- December 12, 2014 5:32 AM | Categories:

Islamic-Finance_Banner Trade Financing Matters welcomes this guest post by Gohar Jawahir Bilal, Managing Partner North Sea Capital, UK focusing on raising and structuring Asset Backed and Structured Trade Finance I call Islamic finance “alternative finance” as its’ fundamental principles are based on Islamic law. What got my attention is that the fundamental rules of Islamic law prohibit taking /giving interest (usury). As a finance professional the first question that came to my mind was “if there is no interest, how does one make money?” This one question made me eventually quit my investment banking job in 1998. I chose to go […]

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Big Pharma talks about Lessons Learned Implementing a Reverse Factoring Program

- December 11, 2014 4:34 AM | Categories:

Ben Poole, editor of GT News recently wrote about Roche’s Global Supply Chain finance (SCF) program here. I encourage you to read it. To summarize, Martin Schlageter, head of treasury operations and Heiko Stangenberg senior cash manager discussed lessons learned implementing a SCF at the recent AFP conference held in Washington D.C. My first thought was where are the Procurement guys? I mean cash guys are cash guys, and any discussion of lessons learned will have a treasury perspective. Still, there are some good nuggets here. Most of it is common sense, but we all need to be reminded of […]

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ReceivablesExchange the largest of the Online Invoice Auction Exchanges

- December 10, 2014 2:57 AM | Categories:

The Receivables Exchange (RecX) describes itself as the leading online exchange for the sale and purchase of accounts receivable. Receivable auction platforms have received much press recently with MarketInvoice securing new financial backing, GLI Finance investing in several platforms, and new exchanges being established in various countries (eg. Germany, Sweden, Russia). But RecX was the first. Their online marketplace to auction single invoices that were not credit enhanced began in April 2007 for small and midsize businesses. The idea at the time was to create a network of institutional buyers who compete to buy invoices via a real-time marketplace. There […]

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Going after Verticals with Supply Chain Finance– Healthcare, Legal, Construction and Freight

- December 9, 2014 4:50 AM | Categories:

ForeLogix home page - Industry Solutions Think about the most difficult and messy invoices there are to finance and you will find opportunities and solutions waiting to happen. I thought about four verticals that present invoices where there could be some serious dilution due to the nature of their services offered. They are: Freight and Logistics – Logistics has one of the highest percentages of invoices that are never paid. Financiers and banks like dealing with clean, high quality invoices. Healthcare – Total health expenditure is huge. In 2012, health-care spending was $2.8 trillion in the United States. If you have ever dealt with billing, payables […]

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When One Bad Alternative Finance Transaction Blows up Your Portfolio

- December 8, 2014 5:47 AM | Categories: ,

Investor interest (and when I say investor I mean Non Bank) in financing business credit (ie, shortening receivables or extending payables) is at all an all time high. But if I am managing funds for a family office funding a few middle market buyer’s and their suppliers via some platform, and one transaction goes bad, all the net discount revenue I earned goes out the window. No investor likes to lose money. None. And in the world of business credit, transactions are PRIVATE. Information is public with retail credit, and all you need to make a credit decision is someone’s […]

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One Banks Concern Over the Dynamic Discounting Space

- December 4, 2014 5:06 AM | Categories:

Banks can put together a comprehensive purchase to pay solution that includes invoice automation, workflow approval, business rules, and of course payment processing (via commercial card, ACH, and wire payments to the supplier) as well as dynamic discounting (DDM). But one area where some banks have their doubts is dynamic discounting. One banker explained that DDM has not taken off at levels in domestic U.S. as he would have hoped. The banker mentioned a few concerns that have impacted their solution to date: Suppliers lack bandwidth – his point was that suppliers do not have bandwidth to make invoice finance […]

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Ledger Extraction Makes Small Business Overdraft Finance More Efficient

- December 3, 2014 5:57 AM | Categories: ,

Much of our focus on TFM is around Purchase to Pay solutions embedding finance. But we cannot forget the enormous market that exists for companies that sell and require finance, part of the Order to Cash side. A few notable banks, namely Barclays and HSBC, have recently rolled out a capability that enhances the overdraft facility for small business lending by using their receivables as collateral. The capability was developed by the vendor hpdsoftware, where their Gemini solution goes into the seller’s books on a real time basis. The seller must agree to upload a bit of software on their […]

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