Supply chain finance (SCF) is gaining rapid popularity in the treasury segment. While supply chain finance programs have been in existence for quite sometime now, the solutions available at present are witnessing greater attention in the business environment as firms zero in their focus on risk management and working capital.
While SCF in its initial days was purely about funding and optimising working capital, it has today transformed to new models zeroing in on garnering efficiency, collaboration, reduced opex and ensuring better security. This heightened demand and interest enveloping SCF along with rapid growth of the segment has concluded in a dire need for technological resources which furnish a comprehensive analysis of the requirements as well as automates work processes. This has resulted in SCF players desperately hunting for seamless solutions which could well integrate with the work processes of their respective organisations.
Picking the right piece of tech
There are three important aspects which should be taken into consideration before you make your investment move: Automation, scalability and user friendly.
Since the nature of SCF platforms is dynamic, finding a solution which aligns with all your requirements is a mammoth task, requiring firms to garner a clear understanding of objectives, their existing capacities and scope for improvements.
SCF solutions can come in various shapes and capacities to cater to different challenges. A financial organisation considering upscaling its SCF business has the following options:
1) Utilising a bank-run platform, investing on in-house IT infrastructure or leveraging another bank’s platform
2) Participating as one of numerous funders in a marketplace
A financial institution can also harness an external software company’s services on a software as a service model, where the service provider takes care of hosting, data aggregation, end-to-end management of transactions as well as effective communication with the stakeholders. This option comes with faster implementation, latest technology and low integration demands and most of low operational expenditure.
As SaaS-based platforms pave their way into the SCF segment the landscape is now evolving towards convenient connectivity options, practically no implementation costs and strengthened interaction across the supply chain, this is true participative partnership. Players in the supply chain finance domain should focus on scrutinising their requirements first before heading to market for a solution. A one-size-fits-all approach will end in nothing but a wasted effort involving a sizeable chunk of your earnings and time.
By – Inderjit Camotra. The writer is executive vice-president, Centrum Financial Services
