Prompt payment legislation could be having a dampening effect on supply chain efficiency, according to research from The London Business School.
In their article, Fix the Financing of Supply Chains, Nitish Jain and S Alex Yang examine France's LME law, which restricts trade credit to 60 days for most French firms.
'We found that the LME had a significant impact on retailers’ inventory investment,' wrote Jain and Yang. 'Taking hardware retailers as an example, the LME caused a 16 percent decline in trade credit, which subsequently led to an 11 percent reduction in inventory. A drop in inventory is not only going to lead to emptier shelves and more unsatisfied customers, but also hurt retailers’ financial performance. Indeed, we observed a 15 percent drop in revenue and a 3 percent decline in gross profit for retailers due to trade credit restrictions.'
Jain and Yang argue instead for a market-based approach that incorporates supply chain finance platforms. 'The future of the financial supply chain should be empowered by technology, not confined by stricter regulation,' they conclude.
Taulia has signed a memorandum of understanding with Standard Chartered to collaborate in delivering working capital finance solutions, starting with supply chain finance and dynamic discounting. It's the first time Taulia has signed with a bank since its acquisition by SAP.
'We are proud to announce the signing of the MoU with Standard Chartered and this marks another milestone in Taulia’s journey to grow our bank network and work closely with our partners to deliver working capital solutions for all of our clients,' said Thomas Mehlkopf, Head of Working Capital Management CoE at SAP and member of the Taulia Leadership Team.
Revenues from supply chain finance at the world's 10 largest transaction banks increased by more than 20% in the first half of 2022, according to new data from Coalition Greenwich.
The increase contributed to a 22% rise in combined revenue from cash management and trade finance to reach $15.6 billion.
Coalition Greenwich tracks transaction banking revenues at Bank of America, Barclays, BNP Paribas, Citigroup, Deutsche Bank, HSBC, JPMorgan, Société Générale, Standard Chartered and Wells Fargo.
Join Europe's top companies at Working Capital Forum Europe, Amsterdam, 1st December 2022
Coca-Cola Europacific Partners, Danfoss, Pepco, Vattenfall and Telia are among the companies sharing their working capital stories at Working Capital Forum Europe in Amsterdam on 1st December.
Other speakers announced today include Duncan Marvin, author of The Pyramid of Lies - Lex Greensill and the Billion Dollar Scandal, Bram Desmet, originator of the Supply Chain Triangle concept and Menno Middeldorp, head of research at Rabobank. A parallel track will include technology demos from cash and working capital leaders such as TIS, Taulia, Coupa, Kyriba, PrimeRevenue and many others, as well as early insights into a supply chain connectivity venture between Commerzbank and Deutsche Telekom.
Full details for the event, to be held at Amsterdam's Beurs van Berlage (above), are here. Around 250 working capital practitioners are expected to attend.