Middle Market Supply Chain Finance – Challenges Moving Downstream

There are analysts, treasury, supply chain finance, trade finance, etc. that still get so confused by what a supply chain finance program is. For example, a recent article on “Could you be a Supply Chain Bully” implied from research done by PwC and SCF Community that only 1 in 10 companies with revenues below £1bn offered a supply chain finance program.  And for corporates of all sizes, the majority have included fewer than 100 suppliers on their program.

Is that really surprising?

Do the analysts commenting on this understand what it takes to put a SCF program in place. It’s not trivial.

To imply that middle market companies can implement supply chain finance programs with their supplier ecosystem is being a bit naive.  These programs are typically challenging to implement in the middle market – and there are numerous reasons these programs have generally not scaled to date in this target segment:

  • Lets start out by saying this is a credit product.  And Treasurers are more concerned with raising capital for normal operations than trying to figure out how to become a bank to their suppliers.
  • Middle market companies may not enjoy the arbitrage advantages with their supply base like the Fortune 2000s do, so there is not the scale that large programs can have.
  • Banks are also less interested in this space because of the high fixed costs involved in onboarding, and so they want to go after programs that will generate large spend.

Join myself and Greg Person, VP, Global Presales, Kyriba Corporation on 16 May as we explore Why Treasury and Procurement Should Collaborate for a Successful Supply Chain Finance Program.  This will be one of the subjects Greg and I discuss, and we look forward to sharing our perspectives with you.

Register for the webinar here!

 

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