Improving access to finance for SMEs with the Open RFI Project

Introduction

For a financial service that claims to have a tripartite win-win-win value, current market adoption of Supply Chain Finance (SCF) is still in its infancy. As the credit rating of the larger corporate is leveraged for SCF solutions, suppliers have faster access to cheaper liquidity from invoices. The large corporate can achieve working capital benefits through payment term harmonisation, or it can reduce the COGS (Cost of Goods Sold). Despite clear benefits, the cost and complexity of onboarding small suppliers have resulted in a slower uptake in this group of suppliers and hence, there has been little possibility to take advantage of the benefits SCF can offer.

The Open Request for Information (RFI), launched by the SCF Community on behalf of a group of Dutch multinational corporations, invited over 30 vendors to show how they would apply SCF solutions to smaller suppliers - those with volumes of EUR 200,000 and below. Corporates recognise the importance of SME suppliers and are looking for ways to improve their access to finance. This recognition is underlined by the support of the Dutch Ministry of Economic Affairs for the Betaalme.nu –initiative in early 2015, which is aimed at injecting liquidity into Dutch SMEs.

The objective of the Open RFI was threefold: 1) to provide participating corporates with an overview of available SCF solutions and solution providers 2) to facilitate structured engagement between SCF solution providers and corporates 3) to perform a structured analysis of the SCF market and available solutions for SMEs. This project allowed for direct comparison of leading SCF vendors for the first time in history.

Preparations for an SCF implementation

There are a number of things corporates should address before starting with an SCF implementation. Firstly, the overall SCF strategy should align with strategy on other areas, such as procurement, finance and IT. Next, due to the multidisciplinary character, various internal departments have to be involved in the setup and enrolment of an SCF program.

Thirdly, a spend analysis of the corporate’s supplier base needs to be made, in order to support a clear and segmented approach to offer selected suppliers the intended SCF solution. Finally, in order to fully reap the benefits of an SCF solution, the internal processes have to be analysed focussing on the efficiency of the procure-to-pay process.

If you want to find out more about how the RFI process works and what are the preliminary results download please download the B2B Fintech: Payments, Supply Chain Finance & E-invoicing Guide 2016.

About Matthijs van Bergen

Matthijs currently holds a position as researcher SCF at Windesheim and
is responsible for developing business cases for Corporates and for the project management of Open RFI. He studied Supply Chain Finance and is an experienced independent consultant for over 5 years.

About Steven van der Hooft

Steven gained extensive experience in the field of Supply Chain Finance through roles as director banking at Inchainge, senior management consultant at Capgemini Consulting and while working at ING. In 2015, he founded Capital Chains, a company that specialises in Training & Consultancy on Financial Supply Chain Management issues for both banks as well as corporates.

About SCF Community

The Supply Chain Finance Community is a not-for-profit group for all those involved in supply chains: manufacturers, transport companies, banks, consultancies, technology providers and academics. Its mission is to share experience, best practice and new research, linking across finance, treasury, supply chain operations, logistics and procurement.