The SCF Barometer asked companies across Europe to identify the extent to which SCF programmes are being used, who they are targeted at, and their success factors. The findings show a rapidly growing level of take-up and a very high level of success, with most companies that have an SCF programme planning on extending or supplementing it. But it’s most likely to be the largest companies that have an SCF programme. Bank platforms currently dominate.

Launched in December by PwC and the Supply Chain Finance Community, it surveyed the experience and opinions of 62 major companies across Europe.

Key findings:

Companies implementing SCF

  • 65% of companies with more than €1bn in revenue had a supply chain finance programme in place.
  • Most companies (64%) with an SCF programme in place had revenue in excess of €5bn
  • Consumer goods and communications & IT were the two sectors with the highest rate of adoption of SCF, with two-thirds of respondents in each having a programme in place – primarily larger companies
  • 57% of the automotive sector respondents and 43% of industrial manufacturers – across a range of company sizes – had SCF programmes
  • Across those four sectors, ‘Working capital optimisation’ was a principle reason for having SCF.
  • ‘Supplier liquidity’ was another principle reason for having SCF in the consumer goods and automotive sectors.
  • In the communications and IT sector, ‘Supplier relationship improvement’ was a principle reason for having SCF
  • 44% of respondents that didn’t have an SCF programme were interested in implementing one

Type and implementation of SCF programmes

  • Reverse factoring was by far the most popular type of supply chain finance, in use by 89% of respondents that have an SCF programme
  • Dynamic discounting and pre-shipment finance were much less common
  • 48% of SCF programmes operated through a bank platform; 21% used in-house developed platforms while other platform providers such as PrimeRevenue and Taulia accounted for 12% of platforms
  • Three-quarters of SCF platforms currently in place have been implemented since 2012
  • Treasury was the initiator for 46% of SCF programmes, with the CFO/FD initiating another 21%. Procurement was responsible for initiating 11% of programmes

Supplier base

  • 36% of companies have up to 25 suppliers who have joined their SCF programme
  • A further 25% of companies have between 25 and 100 suppliers in their programme
  • 14% of companies have more than 1,000 suppliers in their SCF programme
  • 25% of companies opened their SCF programme only to suppliers with a certain amount of spend
  • A further 20% of companies opened their SCF programmes to suppliers with a strategic relationship
  • 16% opened their programme to all suppliers

Rollout

  • In 32% of cases, treasury was the rollout manager
  • Procurement was the rollout manager in 21% of programmes
  • 68% implemented their programmes in less than six months
  • Implementation time was more likely to take less than three months if mixed teams (treasury/finance/CFO/procurement) led the rollout

Success factors

  • The four most important critical success factors were: (1) supplier appetite for cash/SCF; (2) the technology platform; (3) the onboarding process; (4) the making of a commercial offering to suppliers
  • Lack of supplier appetite was the most commonly-cited bottleneck to success
  • 78% of companies with an SCF programme said it was a full success, with 22% saying it was partly a success
  • Almost 80% of companies with an SCF programme said they would extend their programme or introduce other solutions
  • Those companies whose SCF programmes covered up to 20% of spend were more likely to extend their existing programmes
  • Those companies whose SCF programmes covered up to 40% of spend were more likely to implement other SCF solutions

Download a copy of the full research by clicking here.

See also: comment by Michiel Steeman