The first set of standardised supply chain finance (SCF) definitions have been agreed by a preliminary peer review group and an initial draft of the definitions is imminent.
At the International Chamber of Commerce’s Supply Chain Financing Summit 2014 in Paris this week, GTR and delegates heard from a host of panellists on the development of the SCF terminology project.
Angela Koll, vice-president, product manager of international business at Commerzbank, one of the representatives on the peer review group, explained that in August, five members of the group initially sat down to discuss supply chain finance definitions. These results were then passed onto other members of the draft group, who reviewed the terms.
On October 21, 2014, 11 members of the group then met for nine hours to finalise the terms.
Describing these “intense talks”, Koll explained that the difficulty lay in the fact that most group members have very different terms for the same solutions, which vary according to different geographical jurisdictions.
Koll disclosed that finance terms were the first topic of conversation at the meeting. The panel discussed the financial supply chain and the physical supply chain, “under this we then discussed the different types of techniques like supplier finance, invoice discounting, pre-shipment, BPO, forfaiting, factoring: the whole host of supply chain finance terms,” she said.
Koll insinuated that the draft may include the term “supplier financing”: “We discussed that it’s definitely not reverse factoring, as that would be misleading, or whether it is proof-payables finance or maybe payments finance. Some agreed that for the time being that there should be a term for ‘supplier finance’ as this is the term now known, especially amongst corporates.”
She highlighted that there is still work to be done to gather input on the definitions from the corporate community.
According to Koll, the first draft of the definitions will be completed in December. “Then it’ll be handed over to the peering committee for their comments and reviews, before being sent out to other institutions.”
The approved definitions are expected to be released to the industry in January 2016.