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Five years after the start of the financial
crisis, developed countries – and those in
Europe in particular – are finally beginning
to experience an economic upturn.
However, recovery is by no means assured
and governments across the region, and
around the world, are eager to sustain
growth. Supply chain finance (SCF), which
is relatively new to governments, offers
enormous potential to support economic
growth in countries worldwide.
Simply stated, SCF programs decouple the moment a supplier receives
payment from the moment the buyer makes the payment. A bank acts
as a bridge between buyer and supplier and provides an alternative
source of financing to enable suppliers to be paid quicker than usual.
SCF programs rely on the superior credit quality of the buyer thereby
allowing the supplier to obtain access to funds at a more attractive price
than would ordinarily be possible.
In European countries most affected by the financial crisis, many banks
have retreated from the short-term lending market. Small- and medium-
sized enterprises (SMEs), which are a crucial pillar of the economy, have
found it hardest to access credit. For SMEs that supply to governments,
the credit scarcity can be compounded by long payment terms.
Supply Chain Finance
Supports Economic
Growth in Countries
Worldwide
Filippo Sabatini
Public Sector Group
EMEA Head, Corporate
and Investment Banking,
Citi