SUPPLY CHAIN FINANCE, A SOLUTION TO IMPROVE BUSINESS EFFICIENCY

Abstract

The social and economic environment of the Romanian companies is under the influence of several factors, among them being the announced protectionist measures which are reducing the exports, the unknown impact of the Brexit, the probability of the incoming recession in the U.S., the uncertainty of the legal and political climate, the lack of stability and predictability in the Romanian legislation etc. The companies are facing the problem of lacking capital and the necessity of reducing their working capital. Until now, the only viable solution was stocks reduction, but supply chain finance (SCF) can be the solution to reduce the payment term, reduce risk, working capital optimization and to improve the relationship between supplier and buyer. The mechanism of the SCF enables the suppliers to benefit from the financing facilities of the buyer, by leveraging the buyer’s better credit rating.   

Key words: Factoring, working capital, reverse factoring, supply chain finance, invoice discounting, business efficiency