[ Gentle music plays ]
Now in terms of definition, so as I mentioned before it's a big
buzzword but the issue kind is is kind of that a lot of people
don't know really what supply chain finance is and that is why
the International Chamber of Commerce last year, they worked
almost nine months on defining the term supply chain finance.
Maybe I can really quickly, so supply chain finance is defined
as the use of financing and risk mitigation practices and
techniques to optimize the management of the working
capital and equity invested in supply chain finance processes
and transaction. Supply chain finance is typically applied to
open account trades and is triggered by supply chain
events; visibility of underlying trade flows by the finance
provider is a necessary component of such financing
arrangement which can be enabled by a technology platform. So, of
course, it's not important to know the whole definition. I
just marked the key points, I marked them in bold. It's
basically it involves financing and involves reducing the credit
risk, mitigating the risk. It involves mainly working capital
and involves the trade patterns or trade flows based on open
account which I will explain in a few slides and it involves
heavily at technology platform. I mean the basics you can do it
using Excel if you maybe just work with one trading partner,
but here we speak about hundreds of different parties involved,
also external parties like banks, credit insurance
companies, so for that you need a technology platform which can
manage efficiently all the invoices all the payments, and
supply chain finance from my perspective includes several
part of financing solutions. So one is accounts payables
financing. The other one is self funding programs, so basically
where the buying organization acts as a as a financial
institutions with its own cash flow or with its own cash
provide financing to their suppliers and then the third one
is payment card solutions or P-Card solutions offered by all
the credit card issuers and I will go into detail for each
single solution in this session. So to understand a little bit
the topic imagine here there are three networks or three flows
and mostly if you Google supply chain finance you always see a
cargo ship on the ocean which is it's just it just shows one
floor or one network which is the physical supply chain but
there's much more to it. So it's it involves also the financial
network like payments, invoices, credit notes and credit risk and
then in between the physical supply chain and the the
financial supply chain is interacting the information
network which inform-- involves exchange through electronic
means like again invoices payments and also communication
channels and all this together [Clears throat] is where supply
chain finance is acting.