A new supply chain finance innovation is gathering momentum in the US, bringing significant cost reduction and supply relationship management benefits in its wake for supply chain and procurement professionals, Supply Chain Management Review (SCMR) reports.
SCMR editorial director Bob Trebilcock spoke recently to Raistone Capital, a supply chain finance and fintech firm, about a novel programme it had developed to accelerate the payment of tariff refunds for firms qualifying for rebate.
Raistone’s CEO Dave Skirzenski explained that his company had quickly entered the supply chain finance business after the big banks began vacating the field due to banking regulations.
Since that conversation, Trebilcock has come across multiple other examples of innovative new fintech companies entering the supply chain finance space.
His colleague at SCMR, supply chain management expert Mark Trowbridge, explained the new phenomenon.
He said that procurement pros engaged in purchasing have, through negotiation, standardisation and other best practices, wrung all the cost reductions they could achieve out of their supply chains.
They have started to approach new payment terms and financing innovators as their next means to drive value.
Intriguingly, Trebilcock has found that these programmes are not confined to the larger players in the supply chain such as manufacturers or CPG firms – small-to-mid-size companies are also getting in on the act.
Laura Goldberg, chief revenue officer at small business cash flow management solutions provider Kabbage, told him that small to mid-sized firms have similar, if not greater, needs to the bigger players for access to capital.
Traditionally, they have been unable to access the traditional banks and have frequently faced the painful predicament of maxing out their credit cards.
Kabbage seeks to fix all of that for them, offering finance to small businesses (80% of its customers have under $10m in revenue).
This is an innovation that may also come to the UK and Europe – having suppliers that won’t face crises in cash flow is clearly crucial to effective supply relationship management and supply chain management more broadly.