BEST SUPPLY CHAIN FINANCE PROVIDERS 2014

CLOSING THE GAP

The need for financing for supply-side firms continues to grow—particularly in emerging and frontier markets. More companies are looking to SCF to fill this gap.

Supply chain finance has become the buzzword among those banks that, after the financial markets spun out of control in 2008, saw it as a relatively safe means of extending financing to strategic suppliers, based on the creditworthiness of their large buyers. While buyer-initiated programs have their benefits, supply chain finance is so much more than just large global banks’ centering their efforts on top-tier, large-volume markets and clients. The real need for financing is in emerging and frontier markets, where small and medium-size enterprises and distributors have problems gaining access to affordable working capital. According to the Asian Development Bank, the trade finance gap in emerging Asia was as high as $425 billion in 2012.

One good thing is that companies are becoming more aware of supply chain finance. A recent survey by EuroFinance, the treasury research and events firm, found that 27% of more than 200 large companies polled had a supply-chain finance program in place. This figure is expected to grow, given that a further 25% are investigating, planning or implementing a program.

Extending days payable outstanding and improving working capital were the most important drivers (34%), the survey found, followed by better use of liquidity (31%).

Companies looking to implement a supply-chain finance program now have a choice of proprietary banking solutions or multibank platforms that leverage a wide range of financial providers. Yet supply chain finance is still relatively underdeveloped in emerging markets in Africa and the Middle East, and in Asia it is mostly the subsidiaries of Western companies that are instituting programs. A lot of programs are still buyer-led, but there are a handful of providers that offer more supplier-centric solutions such as pre-shipment and warehouse financing. Being able to provide financing much earlier in the supply chain without an approved payable is the Holy Grail of supply chain financing, but it seems few banks have the risk appetite or the in-depth understanding of corporate supply chains to offer this.

In this year’s awards, Global Finance’s editorial team—with input from industry analysts, corporate executives and technology experts—selects the best providers of supply chain financing and management services. A variety of subjective and objective criteria were used for choosing the winners. Factors considered included: market share and global coverage, product innovation, customer service, technology, execution skills and client-specific implementations.              
                                                       

GLOBAL WINNERS (click for more details)
Best Global Supply Chain Finance Provider—Bank	Standard Chartered
Best Global Supply Chain Finance Provider—Non-Bank	GT Nexus
Best Supplier Support and Enrollment	Orbian
Best Payables Supplier Financing Solution	Orbian
Best Pre-Shipment Financing Solution	Standard Chartered
Best Customer Implementation of Supply Chain Financing Solution	Citi and the UK Department of Health’s Pharmacy Earlier Payment Scheme
Best Web-Based Supply Chain Financing Solution	PrimeRevenue
Best Platform Connecting Buyers, Suppliers and Financial Institutions	GT Nexus
Best Integrated Trade, Supply Chain Finance and Cash Management Solutions	Standard Chartered
Best E-Procurement	Ariba
Best Inventory Management	NetSuite
Best Trade Document Management	Citi
Best Analytics for Credit Scoring and Risk Assessment	Dun & Bradstreet
Best Invoice Discount Management	DBS Bank
Best Supply Chain Risk Consulting Services Provider	Marsh
Best Supply Chain Risk Insurance Provider	FM Global

REGIONAL WINNERS (click for more details)
North America	Bank of America Merrill Lynch
Western Europe	Royal Bank of Scotland
Nordic Region	SEB
Central & Eastern Europe	UniCredit
Latin America	Citi
Asia	Deutsche Bank
Middle East	Standard Chartered
Africa	Standard Chartered

GLOBAL WINNERS
 

Although global reach and geographical spread are important attributes in an SCF provider worthy of winning this category, this year we have placed greater emphasis on factors such as a bank’s ability to service the supply chain end to end with a wide range of financing solutions. Standard Chartered remains committed to emerging markets at a time when other banks are withdrawing from or unwilling to do business in areas where the need for financing is greatest. By focusing on the buyer-supplier relationship as a whole, the bank gets involved earlier in the supply chain than many of its peers, allowing it to offer a wide range of financing solutions, such as structured warehouse finance, vendor prepay, pre-shipment finance, post-shipment pre-acceptance and post-shipment post-acceptance, including buyer or distribution finance.

GT Nexus fuses financial and physical supply chain processes in a single place. The amount of information the B2B collaborative platform is able to capture about suppliers and buyers enables it to provide a wide range of dynamic financing solutions, including teaming up with the International Finance Corporation and Coface, a trade insurance provider. GT Nexus founder Kurt Cavano highlights the firm’s program with the IFC in Vietnam and Sri Lanka, where they inspect factories for social responsibility and compliance track records. “The price they get for the finance depends on how they measure up, and this approach incentivizes the right behavior,” says Cavano.

Orbian says most of its supply-chain finance programs are completed within 30 days of initiation. No technical integration, system downloads or changing of bank details is required on the supplier’s part. Recent updates to Orbian’s offering aid supplier enrollment by improving support for local language and legal requirements. Customers praise Orbian’s supplier contracts for being straightforward and easy to understand.
 

Orbian’s funding model is different from other providers’ in that it buys the receivables and then sells notes to potential investors. Its model appeals to an increasing number of companies that do not want SCF to impact their main credit line. It also means they have the flexibility to work with a range of financing providers—including, potentially, investors in trade receivables like private equity or hedge funds. Orbian has also introduced a buyer self-funding option whereby the buyer can fund parts of its SCF program by purchasing notes.

Unlike payables financing or reverse factoring, which are based on approved payables, pre-shipment financing may be initiated from a purchase order or based on the strength of the underlying buyer-supplier relationship. This arrangement plays to the strengths of banks like Standard Chartered, which takes the time to understand these relationships in order to provide an end-to-end offering.

At a time when some national health services are being criticized for inefficient financial management and SMEs are finding it difficult to obtain traditional forms of financing, the Pharmacy Early Payment Scheme, developed by the UK’s NHS Business Services Authority with Citi as the financing provider, is a win-win for all parties concerned. Participating pharmacies get earlier access to monthly advance payments—a cheaper form of working capital—in return for ensuring timely delivery and correct preparation of prescriptions.

PrimeRevenue continues to set the pace in Cloud-based SCF. Its OpenSCi platform features a range of components, including analytics, business intelligence and analysis of a firm’s working capital requirements and financing.

The merger with TradeCard in 2013 further consolidated GT Nexus’ ambitions to “deliver a bank-neutral trade network that automates financial and physical aspects of the supply chain.” The platform connects 25,000 retailers, brands, manufacturers and service providers. It works with in excess of 25 financial institutions, including the IFC and trade insurance providers like Coface.

Standard Chartered was among the first banks to more closely align its trade, SCF and cash management solutions to extend greater working capital benefits to clients. Cash, trade and FX are integrated on its Straight2Bank platform, which enables the bank to provide fully automated end-to-end supplier financing solutions.

Ariba’s business network connects 1.2 million firms in 190 countries. In 2013, half a trillion dollars’ worth of commerce was conducted on the network. Companies use the platform to transact business commerce, exchange purchase orders and invoices and collaborate on early-payment discounts. The acquisition by SAP is starting to lead to tighter integration between that firm’s ERP platforms and Ariba’s procurement content.

The Cloud-based ERP vendor offers inventory and fulfillment management software solutions that provide real-time, detailed visibility into key inventory and supply-chain management metrics including supplier performance, stock on order and tracking of warehouse items, as well as detailed analysis and forecasts of inventory levels.

Managing the myriad of documents (purchase orders, invoices, bills of lading) associated with trade is often just as important as the financing itself. Citi’s Direct Presentation is a Web-based service that automates export letter-of-credit document presentation and examination. It also offers a trade document outsourcing solution where document images for LCs, documentary collections and open account transactions can be transmitted
and uploaded.
 

D&B remains the go-to reference for supplier profiles, including predictive risk scores and performance, which companies use to certify and analyze their supplier base and reduce risk. In an effort to find new ways to deliver proprietary data and analytics, D&B recently acquired Cloud-based analytics and business intelligence provider Indicee.

Drawing on its Asian branch network and expertise in open-account trade finance, Singapore-based DBS Bank recently implemented a large-scale, customized invoice discounting management-financing solution for a customer in the electronics industry. The solution entailed the bank purchasing and discounting receivables from multiple entities and was based on a customized receivables purchase agreement.

In an increasingly globalized world, supply chains are more vulnerable than ever to supply chain risks and disruptions. Recent natural disasters prove how supply chains can be severely disrupted by an event in one part of the world. Marsh Risk Consulting’s Supply Chain Risk Management practice helps companies identify and quantify risks that could impact their supply chain.

FM Global relies on a deep pool of engineering talent to help multinationals manage supply chain risks. The insurer uses a network of more than 1,800 loss prevention engineers to guide clients in more than 130 countries. The insurer has been in business for nearly 180 years and ended 2013 with $9.7 billion in policyholder surplus.

REGIONAL WINNERS
 

BofA Merrill’s Trade Pro online trade-processing application is integrated with its broader CashPro Online solution and provides reporting and online trade document imaging. The bank is a delegated lender to the Ex-Im Bank’s Working Capital Guarantee Program and has a reputation for providing working capital financing to US businesses looking to become global brands.

 

RBS says it is the only bank in the market willing to structure solutions using its own technology, MaxTrad, or third-party platforms, such as PrimeRevenue and Kyriba. Its biggest supplier markets include the UK, the Netherlands, France and Germany.

SEB has a dominant SCF market share in the Nordic/Baltic region. SEB’s strength is the benchmarking approach it takes to assessing companies’ financial supply chains and providing well-integrated supply chain finance, cash management and trade finance solutions.

UniCredit is directly present in 14 markets in CEE. Its Global Trade Management product suite optimizes working capital end to end, from procurement through to receivables, payables and inventory. In Russia, UniCredit is working with worldwide ex-im banks to provide financing secured by trade insurance, and in Poland, Bank Pekao uses the bank’s Trade Support System to offer a wide range of financing solutions.

What sets Citi apart from other providers in Latin America is its ability to offer supplier financing across multiple markets and to deliver standardized processes, platforms and support. Its Citi Supplier Finance platform is standardized from Mexico to Argentina, offering a fully automated end-to-end solution for both buyers and suppliers. The bank says it enjoys significant market share in Brazil, Argentina, Peru, Colombia and Mexico.

Deutsche Bank is present in 16 markets in Asia. The bank recently announced the opening of a Shanghai Pilot Free Trade Zone sub-branch, which will offer, among other services, financial supply chain solutions, structured commodity trade finance and structured trade and export finance.
 

Standard Chartered is well positioned to benefit from the expected surge of interest in SCF solutions in the Middle East. Although the region’s leading oil and gas companies are not dependent on small and medium-size enterprise suppliers, distributor finance, which is one of the bank’s strengths, is proving increasingly popular in the region. 

Standard Chartered structures a wide range of innovative import, warehouse and commodity financing solutions for commodities companies on the continent. It uses alliance banks to provide coverage of 28 countries in sub-Saharan Africa.