– By Andrew Yen, Marketing Director, BSOS. BSOS was a SaaS Awards finalist in 2021.
The COVID-19 pandemic has hit the world severely, and there are so many black swans in the market. From the global economic structure to the supply chain, all of them are facing unstable circumstances and the corporates in the supply chain are one of the biggest victims. They may have sought short-term financing services to maintain business operations and overcome difficulties; therefore, it shows how important digital supply chain finance is – a flexible and easy-to-get solution.
Authenticity Problems in Supply Chain Finance
Due to the fact that the core enterprises often give long payment terms to pay their account receivables, their suppliers need funds; hence, they apply for financing with their account receivables. Especially in the pandemic, the financing requirements are much stronger than they were before. Whereas, the financial institutions or fund providers find it hard to verify authenticity — so the application may end up being rejected. Another huge issue is that there are too many frauds. Taking Taiwanese domestic use cases in this period, for instance: Run Yin Corporates has 8 billion NTD of fraud from 13 banks. That’s the problem of authenticity in account receivables!
Liquidity Problems in Supply Chain Finance
When it comes to the authenticity problem, it also covers the liquidity problem as well, for this is the cause-and-effect relationship. Capital providers need more time and effort to confirm the authenticity of the transactions, which triggers the higher financing cost – which leads to bad liquidity. And this problem afflicts many businesses around the world. Global trade accounts exceed $240 trillion dollars per year. Most of these funds are not liquid since, of course, they are stuck in accounts.
Digital Solutions Spring up
There are so many sorts of solutions that can resolve the above-mentioned problems individually, such as requesting core buyers’ early payment systems, or transferring the account receivables to the capital market. However, these are not the best solutions, for there still needs to be much time and effort to confirm the authenticity of the account receivables.
So, blockchain technology is the better answer. Blockchain has tamper-proof, decentralized and traceable characteristics so that it clearly fixes the problems of the authenticity and then the liquidity.
Digital Transformation for SCF is the Need
What if there’s an efficient solution that benefits every party?
We built SUPLEX – Digital transformation SaaS for Supply Chain Finance. SUPLEX is the best digitalization tool for enterprises to manage supply chain finance. We use blockchain technology to solve the assets authenticity problems and improve the transaction efficiency. We provide all of the functions that existing systems have, and achieve sustainable development and healthy cash flow in supply chain finance – the core buyers can pay early and less with dynamic discount, also helping their suppliers with working capital finance from third-party capital providers, and applying ESG principles in ethical supply chain finance.
Digital Asset is the Future of Supply Chain Finance
Through the digitalization, directly connecting the data and verifying the authenticity of the beginning assets, the original assets will transform into the digital assets. This concept can transfer the digital assets more efficiently and also increase the value. This is the future of supply chain finance that we are always talking about – a more stable and sustainable financial ecosystem.
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