Government Considers Supply Chain Finance
As the debate continues on whether the lenders are doing enough to help out the UK’s SMEs (See yesterday’s news article Small Business Owner Bricks Up Bank ) Business Minister, Mark Prisk, has met with business leaders and finance experts to discuss supply chain finance.
In their green paper Financing a Private Sector Recovery, which was published back in July (read Cable Looks to Boost Small Business Lending), the Government considered a number of options in its goal of boosting small business finance. The green paper was intended as a dialogue-starter between small businesses and the financial services industry.
The consultation period for the green paper closed on Monday the 20th September and the Department for Business, Innovation & Skills (BIS) and HM Treasury received more than 160 responses.
Today’s meeting was the first stage of a period of working with small business and the finance industry to discuss the ideas generated by the green paper and the resulting input from the consultaiton process.
The concept of supply chain finance usually involves a buyer organising finance based on their credit rating and on invoices approved for payment to their suppliers, the idea being that other small business down the supply chain can cover their working capital whilst waiting for payment.
Business Minister Mark Prisk said:
“Small businesses will be critical to the economic recovery and helping them access a range of finance options is essential for those firms looking to expand and grow.”
“We want to work with business to find the best solutions for increasing finance to small firms, who have previously relied on banks for their finance. I am delighted to see the responses to our finance green paper suggesting alternatives to traditional bank lending, from which today’s discussion on supply chain finance has emerged.”
“Today’s meeting was informative and useful. Supply chain finance is clearly an option that all large corporates should consider providing. It is one option that could help plug the funding gap of their suppliers while looking to cover working capital as they await payments. I look forward to further productive discussions on other finance options.”
For further reading on supply chain finance read our business advice articles on Debt Factoring and Invoice Discounting, The Difference between Factoring and Invoice Discounting or Cashflow Management.