Cross-industry initiative establishes Standard Definitions for Techniques of Supply Chain Finance
A step ahead in the common understanding of terminology and techniques in supply chain finance.
A new set of
definitions launched today will help address the global need for a
common understanding of terminology, nomenclature and techniques related to
supply chain finance.
during a dedicated panel discussion at an ICC Academy hosted Supply Chain
Finance Summit in Singapore, the Standard Definitions for Techniques of
Supply Chain Finance are the result of a collaborative, inclusive and consensus-based joint
initiative of the International Chamber of Commerce (ICC) Banking Commission as
project facilitator, BAFT, the Euro Banking Association (EBA), Factors Chain
International (FCI) and the International Trade and Forfaiting Association
(ITFA).The International Factors Group (IFG), one of the original sponsoring
associations is now integrated with FCI.
members of the Drafting Group, under the guidance of the Global Supply Chain
Finance Forum Steering Committee, the Definitionswere compiled based
upon views and feedback provided by a large representation of industry
specialists and other interested parties. Including definitions and
descriptions of eight identified core techniques and the Bank Payment
Obligation as an enabling framework for Supply Chain Finance, they provide
clarity for users, including finance providers, corporates, commercial and SME
clients, investors, regulators, legal practitioners, information technology and
infrastructure providers, as well as other trade finance related communities.
Standardized Supply Chain Finance terminology will ensure a much clearer communication in this rather complex ecosystem of providers, clients, accounting and legal professionals, regulatory authorities and others involved in international supply chains.
Finance is defined as the ‘use of financing and risk mitigation practices and
techniques to optimise the management of the working capital and liquidity
invested in supply chain processes and transactions. SCF is typically applied
to open account trade and is triggered by supply chain events. Visibility of
underlying trade flows by the finance provider(s) is a necessary component of
such financing arrangements which can be enabled by a technology platform’.
Supply Chain Finance terminology will ensure a much clearer communication in
this rather complex ecosystem of providers, clients, accounting and legal professionals, regulatory authorities and others involved
in international supply chains,” said Kah Chye Tan, immediate past Chair of the
ICC Banking Commission and Chair of the Global Supply Chain Finance Forum
BAFT President and Chief Executive Officer and Vice-chair of the Global Supply
Chain Finance Forum Steering Group said: “Supply Chain Finance has grown and
evolved in recent years in response to shifts in corporate supply chains and
the ever-growing demand for trade finance. This publication should aid the
market, regulators and other stakeholders in gaining clarity and consistency on
the various terms and techniques used.”
Issued as a
“living” document, the definitions will be regularly updated to remain aligned
with market developments and be widely disseminated to promote the global
adoption of the suggested terminology.
Download a PDF copy
of Standard Definitions for Techniques of Supply Chain Finance
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