What is supply chain finance?

Supply chain finance is a kind of financial service;

Banks manage the capital flow and logistics of upstream and downstream small and medium-sized enterprises around the core enterprises, transforming the uncontrollable risk of a single enterprise into the controllable risk of the whole supply chain enterprise, obtaining all kinds of information in a three-dimensional way, and controlling the risk to the lowest financial service.

In China, it is generally regarded as a new financing model for small and medium-sized enterprises, which effectively integrates the capital flow into the supply chain management process, providing both trade capital services for enterprises in all links of the supply chain and new loan financing services for weak enterprises in the supply chain, relying on core customers and taking the real trade background as the premise, and adopting self-compensating trade financing methods.

：

Supply chain finance background

As an important part of supply chain trade, capital flow runs through the operation and management process of supply chain system. In the general supply chain operation, the purchase, processing and final sale of raw materials involve the capital expenditure and income of each link of the enterprise. Because of the time difference between expenditure and income, there is a funding gap.

Generally, there is a capital gap between placing an order and receiving goods, and there is a capital pressure between receiving goods and completing sales. At the same time, inventory management needs financial support. In addition, there is also a certain fund gap between selling products and paying for goods by downstream customers, and there is a cash conversion cycle between receiving goods and actually receiving cash, which may adversely affect the cash flow of enterprises. Based on the shortage of funds in the process of business development, supply chain finance came into being.

Reference: Supply Chain Finance (Financial Services) _ Baidu Encyclopedia