How can we help gain more business in receivables finance?

Education is the first and, in my opinion, one of the most important challenges that requires our immediate attention and cooperation. There is an enormous lack of awareness and understanding (even confusion) around receivable finance, factoring and supply chain financing in emerging markets. The lack of awareness/ knowledge and education availability is a serious issue for financial institutions, as they need access to these products – this even applies for the development banks, although to a lesser degree.

The role of Fintechs in supplier finance

Some of the earliest notable movers in Fintech entered the supplier finance space. Fintechs digitised the enrolment of suppliers, making it easier and quicker, invited local and regional banks to participate in a market previously dominated by MNC banks and they expanded the marketable buyer base to non-rated corporates via securitisation models (albeit a model in its infancy). More recently, some have expanded their scope to include procure to pay solutions integrated with supply chain finance. These developments have been important for the SME segment, as more SMEs have more financiers ready to offer them finance.

Commenting on the use of supply chain finance

I have to say that the product, if managed it well, it is very profitable and has a low risk profile. Clients used to be solvents and you can control the risk closely. The product provides a capacity to dramatically manoeuvre very quickly,as new invoices can stop being accepted at any moment. The outstanding risk is for the finance that has already been advanced to the suppliers, but this will not increase. In fact, it will gradually decrease in the coming months when the invoice due dates arrive, eventually eliminating the risk.

All that glitters is not gold...

The Trump Administration has been in charge now for about 100 days and it appears that the initial SME “euphoria” has pretty much evaporated. Why do we sense this? We talk, communicate and interact with SME business owners, prospective and current clients and partners’ everyday of the week and there seems to be a growing unease with the way things are panning out under the new President. If history teaches us anything, it is that when SME owners get uncertain and nervous, plans to expand, add new employees and seek working capital to fund these efforts [including factoring] get put on hold. If this occurs again in 2017, plans for any reasonable growth in the factoring industry and bank lending in the United States will be very difficult if not impossible to accomplish.