As international trade has moved away from the use of documentary credits towards trading on open account terms, finance providers such as banks, other financial institutions and fintech businesses have stepped in to meet the fast-growing demand for funding solutions.
The problem, says the International Chamber of Commerce (ICC), is that the phrase ‘supply chain finance’ means different things to different people – “it is used today to refer to a single product or technique, and just as often, to refer to rather more complex, holistic programs that might encompass multiple techniques aimed at meeting a variety of needs across domestic as well as international supply chains,” says the ICC.
Now, the Global SCF Forum – a collaboration between the ICC Banking Commission and a number of other international organisations has created Standard ICC Definitions for Techniques of Supply Chain Finance, a global drafting initiative to develop common definitions, terminology and nomenclature around supply chain finance.
“SCF propositions have evolved at different rates and in varying directions by region and at the level of individual providers,” the publication says, adding that there are “clear benefits to the financial industry, regulatory authorities, clients and other stakeholders, from the development and dissemination of standard definitions and terminology.”
The participating organisations are: Bankers Association for Finance and Trade (BAFT), the Euro Banking Association (EBA), Factors Chain International (FCI) and the International Trade and Forfaiting Association (ITFA).