No One Size Fits All Approach In Supply Chain Finance

Published in Financial Express

Inderjit Camotra, Executive Vice President, Centrum Financial Services Pvt Ltd.

Supply Chain Finance(SCF) is gaining rapid popularity in the treasury segment. While Supply Chain Finance Programs have been in existence for quite some time 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.

It is also worth noting that while SCF in its initial days was purely about funding and optimizing 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 have 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 organizations.

For instance, we at Centrum Financial Services were eyeing a solution which would help us do the brick and mortar, which is on cloud and supports transactions seamlessly. To sum it up we were looking for a solution which could make our ”Fit for Growth” strategy achievable.

Picking The Right Piece of Technology

Since technology is it in the house or outsourced on multiple platforms is pivotal for the success of any SCF program, there are three important aspects which should be taken into consideration before you make your investment move-:

Since the nature of SCF platforms is quite dynamic, finding a solution which aligns with all your requirements is a mammoth task requiring firms to garner a clear understanding of their objectives, their existing capacities, and scope for improvements.

SCF solutions can come in various shapes and capacities to cater to different challenges. A financial organization considering upscaling its SCF business typically has the following upfront options-:

Utilizing a bank run platform, investing in in-house IT infrastructure or leveraging another bank’s platform.

Participating as one of the 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, an end to end management of transactions as well as effective communication with the stakeholders.

As against a licensed solution, this option comes with faster implementation, latest technology and low integration demands and most of the low operational expenditure

In our case, we found Encore Theme Technologies’ solution robust enough to handle large volumes and automating the processes of invoice discounting and invoice settlement. It also performs complete eligibility check with individual invoice level tracking, eliminates duplicate invoicing and reconciles of invoices with payment for us.

As SaaS(Software as a Service) 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 a true participative partnership.

Concluding my thoughts I would like to suggest the players in the Supply Chain Finance domain to focus on scrutinizing 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.

Author: Inderjit Camotra, Executive Vice President, Centrum Financial Services Limited


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