Supply Chain Finance

"Supply chain finance provides a unique opportunity for finance and procurement professionals to provide significant and measurable bottom line benefits to their organizations."

- AberdeenGroup: 'New Paradigm Supply Chain Finance Offerings Compel CFO and Treasury Interest in the Supply Chain'

SCF - The Best Kept Secret?

"Suppliers, who have limited access to capital, often have to rely on high-cost financing methods like factoring or asset-based lending to fund their working capital and improve their cash positions. Even traditional early payment discount terms - like 2% net 45 - translate to an anualized rate in excess of 20 percent. This high cost of financing is a burden to suppliers, which in many cases is passed on to the buyers in the form of higher cost of goods and services"

Paystream Advisors, Inc. - "The Next Generation in Financial Supply Chain Solutions", Analyst White Paper, Jan 5, 2006

"Overall, just as supply chain managers hedge against uncertainty by holding more inventory, finance managers hedge against it by holding more cash. Thus the financial productivity of enterprises is being undercut by a widespread lack of global supply chain visibility and automation. For instance, companies with over $1 billion in revenue...say that their international supply chains are only 50% as automated as their domestic supply chains. SCF solutions can offer a way to achieve some of this much needed visibility and control.

SCF releases the "trapped" value in the procure-to-pay and order-to-pay cycles by eliminating paper documentation, minimizing data errors, providing faster dispute management and easier detection of duplicate payments, and enabling increased transparency of purchase-to-pay and order-to-cash processes. These drive additional hard-dollar cost savings on top of the SCF benefits of cash flow and cost of capital improvements."

Aberdeen Group, Inc. - "Get Ahead with Supply Chain Finance", Research Brief, Jul 21, 2006

SCF - Your supplier's ATM

Supply Chain Finance is about large buying corporations using their investment grade rating to provide funding to their smaller suppliers at near wholesale rates. The finance itself can either be provided by a financial institution, a third-party vendor, or by the buying corporation itself.

The Supply Chain Finance solution provided by Burns is based around financing suppliers invoices - known as "Post-shipment Financing" - but there are also "Pre-shipment Financing" options where financing is based upon Purchase Order values.

To learn more about the Burns solution - the Burns Total Invoice Settlement Service - click here.