Innovations in the use of smart data are set to shake up the supply chain finance market, according to speakers from banks and tech firms at the SCF Forum in Amsterdam.
Paul Christensen, founder and chief executive officer at Previse, showcased the company’s payment solution that promises to give suppliers the option of instant payment.
“Payment terms are a massive inefficiency,” he said, adding it is a problem that few people are tackling.
His company’s solution uses the latest technology to analyse supplier data based on historic performance data to predict the probability that an invoice won’t be paid within a prescribed payment term. Once those high-risk invoices are taken out, Previse pays the rest.
The system is based on algorithmic invoice payment decisions, a technology created by Previse. It aims to quantify dilution risk, to allow funding partners to underwrite instant payment. For those suppliers that opt to be paid early, a fee is charged that is shared between the buyer, funder and Previse.
Christensen said small and medium-sized companies are calling out for this kind of solution, suggesting that for many of these smaller firms, the financing rate is not necessarily the top priority. “Almost the most important thing is simplicity, not the financing,” he said.
Raluca Voinea, product manager at ING, told delegates about the bank’s new app, Intellichain, currently under development. The app set out to provide users with real-time updates on potential disruptions to their supply chain to help clients cut costs and gain more transparency. It uses open technology, meaning that it can be used via ERP systems, mobiles or email. “It is easy to integrate with other platforms,” she said.
The app also allows users to focus on particular types of suppliers and their related risks. “It is important you can sort your suppliers based on exposure, putting important suppliers first,” she explains. It is being built in partnership with clients, with 13 clients involved in the ‘discovery’ programme. Over the next six months, ING will be testing the product before ultimately taking it to market, Voinea said.
Pieter Klapwijk, co-founder of start-up firm AgOS ,which facilitates end-to-end supply chain finance in agriculture using blockchain technologies – updated the market on its new Supply Chain Finance House initiative. The project was only formally launched in September.
Under the initiative, the ‘Supply Chain Finance House’ takes possession of the goods flow and pays all supply chain participants for their value-added portion of the supply chain, before getting repaid at the end.
AgOS is working with a financing partner, a law firm, an insurance firm and a payment service provider, and is in the process of developing a proof-of-concept, which Klapwijk told delegates would be ready in early 2019. AgOS aims to start to scale the product later in the year.