Supplier Finance growth in the SME markets

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21 April 2010

By Matthew Frohling, Global Product Manager, Supplier Finance, Global Transaction Services, Citi. The trend is toward supporting small and mid-sized suppliers who don’t necessarily ship their goods across oceans.

In today’s market, companies are hitting a wall in their search for liquidity. And ironically, it’s coming at a time when they can ill afford disruption to their cash and revenue flows.

With the cost of borrowing on the rise, companies have sharpened their focus on optimizing working capital and finding alternative funding sources to reduce reliance on capital markets. In addition to credit capacity, firms are concerned about the health and viability of their vendor and supplier base, and are seeking solutions to maintain supply chain stability.

As small and mid-size enterprise (SME) suppliers are impacted by the credit crunch, they continue to face difficulty obtaining loans. Meanwhile, their corporate buyers need to ensure an uninterrupted flow of components and materials from these suppliers. After all, failure of a critical vendor can impact production and shipment of goods to the entire distribution network, and ultimately stall...

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