What are the Supply Chain Finance solutions of the future?

I get a lot of the following requests in my inbox.

I am quite new to supply chain finance, and am doing a research paper for xyz and would like to expand my knowledge quickly. Currently I am conducting a research paper about developments of SCF (focus on Switzerland and EU) and its effects on working capital. I am overwhelmed by the number of tools out there from factoring, reverse factoring, modern SCF solutions with online platforms, open account trading, letter of credit, trade financing... and I could name many more. But what will be a beneficial tool for the future regarding changes in regulations and upcoming market challenges?

Yes, everyone wants to know what the killer app is going to be.  I typically respond by saying what you are referring to above are products that have been defined by banks and are governed by various forms of regulation in each country.  For example, in the USA, the UCC Article 3 governs negotiable instruments and Article 9 governs Letters of Credit.  The reality is all these products and new forms of finance are great, but anyone lending money, the first question asked is what happens when I do not get my money back – what recourse do I have?  Corporations lending their own money to self-fund their supply chain do not have that issue – BUT – many do not want to use their cash in that way in any significant manner.

As to upcoming market challenges, there are many – the consequences of the financial recession has had a significant impact on the credit and capital markets.  Regulation, both national and federal, is also a game changer.  All we have to do is witness Basel 3 and the Liquidity Coverage Ratio and Supplemental Leverage ratio and its future effects on trade credit availability.

As to an interesting development to watch, keep your eye on not so much a tool but a technology in the form of Supplier Networks. They take an invoice-centric approach to their integrated receivables initiatives, yet to date typically lack payment and finance capabilities.  Many are looking to change that (for highly selfish reasons, ie, increase valuation of their company).   Jason Busch has covered this space extensively , most recently in his piece E-Invoicing in 2014: The Battle of the Barbarians, Vikings, and Aliens.

After answering their emails, I usually end by asking if they can please share with me their research paper when done.  I typically never get a reply.

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