Finance is the lifeblood of the real economy. In recent years, supply chain finance, as an important means to promote the development of industrial chain and supply chain, has attracted increasing attention from all walks of life in the whole society. What is “supply chain finance”?
I. The proposal of supply chain finance
In October 2017, the General Office of the State Council issued the Guiding Opinions on Actively Promoting the Innovation and Application of Supply Chain (GBF [2017] No. 84), which was the first time that the State Council issued a guiding document on the innovative development of supply chain, and for the first time proposed the concept of supply chain finance, emphasizing that “we should actively and steadily develop supply chain finance, promote supply chain finance services for the real economy, and effectively prevent supply chain finance risks”.
In September 2020, the People’s Bank of China, the Ministry of Industry and Information Technology, the Ministry of Justice, the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the Opinions on Regulating the Development of Supply Chain Finance to Support the Stable Circulation and Optimization and Upgrade of Supply Chain Industry Chain (Yinfa [2020] No. 226), which is the first guiding document on supply chain finance issued in China. The Opinions proposed a total of 23 policy requirements and measures, including: accurately grasping the connotation and development direction of supply chain finance; Steadily promote the standardization, development and innovation of supply chain finance; Strengthen the construction of supporting infrastructure for supply chain finance; Improve the supply chain financial policy support system; Prevent supply chain financial risks; Six aspects of strict supervision and restraint on supply chain finance.
II. Concept of supply chain finance
Supply chain finance (SCF) refers to the use of financial technology to integrate logistics, capital flow, information flow, and other information from the perspective of the entire supply chain industry chain. In the context of real transactions, it builds a financial supply system and risk assessment system that integrates the core enterprises and upstream and downstream enterprises that dominate the supply chain, providing systematic financial solutions to quickly respond to the comprehensive needs of enterprises in the industry chain such as settlement, financing, and financial management, reduce enterprise costs, and enhance the value of all parties in the industry chain.
III. Product types of supply chain finance
Pledge financing through a pool of bills
It refers to the bill pledge financing business provided by commercial banks to enterprises in a total volume control mode, using the bill pool formed by the pledge of corporate-held bills as collateral. Enterprises pledge their held bills, such as bank acceptance bills, commercial bills accepted by finance companies, and commercial bills accepted by enterprises, to commercial banks to establish a bill pool. The value of the bills in the pool will be converted into corresponding financing limits, which can support enterprises in handling various financing businesses.
II. Commercial acceptance bill discount
Refers to the business of commercial banks promising to discount specific commercial acceptance bills within the credit limit of core enterprises. That is, the acceptor is given a certain credit limit for discounting commercial acceptance bills, and the holder can handle discounting within this limit.
Reverse factoring without recourse
It refers to the non-recourse public factoring conducted by commercial banks for the accounts receivable of upstream suppliers of core enterprises. Upstream suppliers transfer their accounts receivable held by the payer as the core enterprise to commercial banks, which provide them with accounts receivable management and financing services.
Four-electron payment commitment letter
It refers to the electronic payment commitment letter and electronic creditor’s rights and debts voucher issued for the accounts payable of core enterprises to their first-tier suppliers. It is split, circulated, held, and financed in the supply chain through the offsetting of creditor’s rights and debts, providing online and automated accounts receivable financing services for core enterprises’ multi-level suppliers across the country.
Five guarantee exchange warehouse
It refers to a credit business in which the dealer pays the advance payment to the core enterprise through bank financing based on the signing of a tripartite cooperation agreement between the dealer, core enterprise, and bank. The core enterprise gradually ships the goods according to the bank’s notice and assumes the responsibility of confirmation.
Niuinfo Technology is a supply chain digitalization service provider headquartered in Shanghai, with R&D branches in Suzhou and Dalian. As a high-end market leader in digital services for China’s transportation and supply chain industry, Daniu has a full range of logistics supply chain management information products, rich system implementation experience, and management consulting capabilities. We are committed to promoting the innovation of the circulation system with information technology and services, and empowering the digitalization process of enterprise supply chain management – fulfilling the mission of “linking enterprise digitalization and building a new industrial economy”.
