Reducing Risk Through Consolidation and A Multi-Funder Network

When the bank funding Asahi’s Supply Chain Finance (SCF) program exited with short notice a few years ago, they were unprepared and uncertain about how to move forward. In today’s volatile and frequently disruptive environment, their situation can quickly become anyone else’s reality, which is why a multi-funder model is essential.

The banking industry and supply chain programs have not been able to avoid the impact of the recent economic disruptions. Changes in base rates, credit risk aversion, and inflation have made managing finance and credit lines a challenge and has led global banks to shut down SCF programs with no warning.

This has happened for years and will continue to be the case, which is why we recommend companies going to a technology-first multi-funder program. When it comes to protecting your supply chain or ensuring the benefits of SCF and early payments to suppliers, the most practical answer is to consolidate your technology into a single program backed by multiple funders in case one decides to exit the market.

Mitigate Risk with Multi-Funder Supply Chain Finance

Moving to tech that can call upon hundreds of banks will de-risk your programs if one pulls out of your market or abandons SCF entirely to prevent catastrophic supply chain disruptions in the future.

For example, several years ago, Royal Bank of Scotland (RBS) ceased funding SCF programs in all countries except the UK. PrimeRevenue stepped in and connected all affected suppliers to a multibank program just weeks after, preventing a halt to early payment. Especially in today’s volatile economic environment, suppliers cannot suddenly have low-cost liquidity options taken away.

Calling back to Asahi, they were able to fill the gap their bank-led program left with PrimeRevenue’s multi-funder SCF program. In only six weeks, they onboarded more than 100 suppliers.

Many corporations rely on an underdeveloped, single-threaded program that may no longer be able to support SCF in such a volatile economic environment. Turning to a solution that offers a greater funding network to imbue stability is nearly imperative today.

Reduce Inefficiency of Running Multiple Single Bank Supported SCF Programs

There’s an equally inefficient obstacle that can develop from running too many programs at once. Using multiple tools may seem as if you’re dividing the workload, but you’re only dividing the focus and attention you have to extend, allowing more opportunity for mistakes to be made. It is also less cost effective to pay for several solutions when you can budget for one that will perform multiple jobs.