7 Hacks To Build A Scalable Supply Chain Finance Program

A supply chain finance program which can be scaled up to achieve long term growth takes a lot of hard work and practical execution skills. Running such a program involves strong analytical skills, robust planning as well as clear, well-defined objectives right from inception.

A willingness to synergize on-the-go, determination to execute everything down to the minutest detail in mission critical mode and having a knack for problem solving and troubleshooting would go a long way in the success of a supply chain finance program.

Here are seven simple hacks which could be used to build a scalable supply chain finance program:

Target The ‘Long-Tail’ Or ‘Deep-Tier’ Suppliers

• It is relatively easy to focus on high value Tier-1 suppliers who tend to have stronger balance sheets. Hence, there is no dearth of supply chain solution providers competing to cater to them, leaving the smaller suppliers starved of working capital because of their limited availability of data on their creditworthiness.
• The real challenge lies in empowering small-ticket size or ‘deep-tier’ suppliers consisting of the ‘long tail’ of the supplier ecosystem, since this category of suppliers still finds it difficult to raise capital. Since it is relatively difficult to cater to ‘deep-tier’ suppliers, there are very few supply chain finance solution providers which are equipped to cater to them.
• Yet, if supply chain solution providers could cater to this ‘deep tier’ supplier ecosystem, it would certainly bring value to their financing partners or banks in terms of getting them a larger base of clients.
• Besides, catering to a high volume of low-ticket size suppliers could prove beneficial to reduce the efforts of corporate anchors’ payables team in terms of payment follow-ups, settlements, as well as reconciliation. Catering to ‘deep-tier’ suppliers also contributes towards making supply chain programs truly scalable, which is precisely what Veefin’s supply chain solution enables.

Built-In Credit Checks / Incorporate Credit Check Processes

• Credit checks are a vital part of keeping supply chain finance programs functional and information technology is a key enabler by providing transparency to all stakeholders.
• Digitizing the process by enabling electronic purchase orders, electronic invoices and electronic modes of payment have ensured that all stakeholders have access to the same version of the truth regarding transactions, and enable credit checks.
• Digitization of all processes ranging from invoicing, documents management, matching of invoices and purchase orders, their reconciliation and approval, automated accounts and payables management, as well as multi-bank connectivity can prevent fraud.
• Supply chain finance solution providers have designed electronic platforms which enable suppliers to see their invoices, payments and receivables online as well as ask for accelerated payment on these receivables.
• For a supply chain program to be sustainable in the long run, it is necessary to have such in-built modules to perform regular credit checks within the ecosystem of the platform.
• Supply chain finance solution providers like Veefin have the capability to integrate with buyers’ ERP systems. This enables buyers’ ERP systems to send approved invoices automatically to supply chain platforms. After invoices are received, supply chain platforms may automatically notify suppliers, who may login to such platforms, select invoices they wish to finance, and issue purchase requests.
• Such integration also enables automated auditing of data to detect any discrepancies, as well as notify users when any are found.
• In order to facilitate cross-border and cross-currency transactions, supply chain solution providers comply with open protocols like the Society for Worldwide Interbank Financial Telecommunication (SWIFT) ISO 20022 financial messaging standards.