Global Supply Chain Finance Forum issues receivables discounting guidance to drive further clarity
The Global Supply Chain Finance Forum has announced the release of its new guidance document, Market Practices in Supply Chain Finance: Receivables Discounting Technique. The paper is the first in a series of industry guidance documents intended to provide clarity and consistency to the world of supply chain finance.
Supply chain finance is one of the fastest growing trade products, however, financial institutions often don’t use similar terminology or accounting techniques. The Forum, comprised of BAFT (Bankers Association for Finance & Trade), Euro Banking Association (EBA), Factors Chain International (FCI), International Chamber of Commerce (ICC), and International Trade and Forfaiting Association (ITFA), is issuing a series of guidance documents based on its 2016 Standard Definitions for Techniques of Supply Chain Finance to get all industry stakeholders on the same page.
The paper released today focuses on receivables discounting – a technique and form of receivables purchase, flexibly applied, in which sellers of goods and services sell individual or multiple receivables (represented by outstanding invoices) to a finance provider at a discount.
“Our hope is that this guidance will lead to an industry-wide, uniform adoption of the receivable discounting technique,” said Christian Hausherr, European product head of supply chain finance at Deutsche Bank and chair of the Global Supply Chain Finance Forum. “When all parties use similar techniques and terminology, it makes for a more streamlined and efficient process.”
The Forum will continue to issue guidance on individual techniques within supply chain finance including payables finance and plans to study the market evolution and develop relevant statistics.
To view Market Practices in Supply Chain Finance: Receivables Discounting Technique, please visit: supplychainfinanceforum.org.