Three quarters of Europe’s top banks see strong growth for supply chain finance, according to the latest research by Demica.
The study, which takes in the top 40 banks, suggests a more cautious outlook than last year, but highlights the enduring appeal of supply chain finance as companies deal with low growth and the Eurozone debt issues.
Respondents anticipate annual SCF growth rates between ten per cent and 30 per cent per annum in mature markets, and 20-25 per cent in emerging markets where the need for financing is particularly pressing to help cope with rapid expansion.
Optimum liquidity management has moved to the top of the financial management agenda, prompting a heightened interest in supplier financing.
In mature markets, Demica identified working capital optimisation and reduction of supply chain risk as the primary drivers for establishing SCF programmes. In emerging economies, access to liquidity and enabling suppliers to keep pace with buyers’ growth are the key motivations.
Demica chief Phillip Kerle said: “The corporate credit squeeze triggered by the financial crisis has made companies much more aware of the need to optimise working capital and to protect their smaller suppliers to avoid supply chain disruptions. Particularly in emerging markets, suppliers might not have sufficient working capital and often have poor access to bank credit.
“By binding suppliers into a structured SCF programme, buyers can ensure the financial health of their suppliers and thus secure their supply chains.”