Global Supply-chain Finance Solution Set
Some of the product solutions that could be sold under the banner of Global Supply Chain Financing include, but are not limited to: 1.) Global asset-based lending (GABL) – Enables middle market companies to monetize off-shore or in-transit inventory. This results in increased liquidity to this class of borrower, 2.) Inventory finance – Enables companies that supply to large buyers to secure financing on inventory that they are required by buyers to hold. This results in an improvement in the net cash conversion cycle for the buyer while providing the supplier with capital at a reduced rate. 3.) Receivables management services – Provides third-party outsourcing of receivables management and collections process. It also provides financing of those receivables and guarantees on the payment of those receivables. 4.) Payables discounting -Provides third-party outsourcing of the payables process and leverages a buyer’s credit quality to obtain favorable financing rates for suppliers. This results in lower cost of capital for the supplier, a portion of which can be passed on to the buyer. 5) Insurance – Further mitigates trade risk through cargo, credit, and transaction dispute insurance.
Because of the complexities surrounding the sharing and transferring of data, the need to physically control the goods, and to maintain visibility throughout the fulfillment supply chain, transportation and logistics providers such as UPS have unique capabilities to support and provide SCF services to global organizations due to their access to the shipping data and capabilities as a lender. In these unique situations, UPS as a translator can participate in the lending as well as collaborate with other lenders in helping to extract costs from the supply chain and ensure that the physical and financial supply chains are synchronized.
Traditionally, dynamic payables discounting, the early payment of trade payables in advance of the invoice due date, has been only related to invoices that are already approved. Given these discounted payments are paid post-goods receipt and approval, they don't carry any transaction risk which is common in cross border trade. Given the complexities of modern financing and payment techniques, invoicement including invoice automation and discount management initiatives need a framework to ensure that programs are approached on a strategic basis which bridges the supply chain, purchasing, accounts payable and finance organizations.
Examples of solution providers are TradeCard, Demica, and Manhattan Associates.
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