Published : October 3, 2023 , Updated : July 16, 2024

The Role of Technology in Streamlining Supply Chain Finance

The Role of Technology in Streamlining Supply Chain Finance

Before we even fully understand and realize it, technology has taken over how we live today. It has entered our lives from each direction and has transformed how we live, work, operate, and do business. All for good? Maybe yes, but not entirely. That’s a different debate altogether. Here, we will keep our target focused on the positives.

Coming back to the main point, from living, working, and business, technology’s light on business has brightened the path with improved efficiency, easing out the boring tasks so important tasks can be focused more.

Supply chain finance is one area where technology’s impact has been huge. Over the years, the way SCF has been streamlined due to technology has made the process much more effective and convenient to carry out. Supply chain finance technology delivers substantial value to your firm in areas like cost optimization, revenue development, faster speeds, and greater control, to name a few.

Key Takeaways

Technology has brought much needed changes in SCF, enhancing effectiveness and reducing challenges linked with the traditional method.
Technology-driven solutions offer many advantages including streamlined data access, improved decision-making, flexibility, and effective collaboration.
Future trends in supply chain finance include digitalization, many financing options, and a focus on error correction and risk reduction.

Traditional Supply Chain Finance and the Challenges

We all know that supply chain finance has been in existence for years now, but the way it is done manually poses many challenges and operational loopholes. Some of the major challenges were:

1. Everything Manual

The traditional method was mostly paperwork, with higher chances of mistakes and an increased cost. It ultimately resulted in delays, which made it a less popular financing method for many customers. The cost of handling this documentation is estimated to be between 5 and 10% of the transaction amount.

2. Less Transparency

For supply chain finance to be successful, trust, collaboration, and coordination between stakeholders are the three most important factors. The trust factors come from having end-to-end visibility of the entire process. This makes sure that things move smoothly, there are fewer mistakes in what’s needed, and everything works better and faster.

Now, as mentioned earlier, the traditional supply chain finance was mostly paperwork, manipulation was easy, making it less trustworthy.

Example: Someone can delay the payment and record in the dates that the payment was made at the right time.

3. High Cost

The hefty amount of paperwork and documentation needed more people. Sending documents from one place to another was a costly affair. Hence, the cost was higher.

How Does Technology in Supply Chain Finance Work?

The huge amount of data involved in supply chain finance is one of the major things that needs to be managed effectively for a plethora of advantages to follow. One such area is to manage the data and get meaningful insights from it.

Here, technology enters and leads to the much needed transformation. Technology helps businesses collect, consolidate, and analyze data for the benefit of the business. It automates the supply chain finance process from A to Z like invoicing, approval, credit assessment, and even final settlement.

Technologies Powering Supply Chain Finance Solutions

The following are the various types of supply chain finance technology solutions:

● Internet-of-Things (IoT)
● Automation and Robotics
● Enterprise Resource Planning (ERP) systems
● Warehouse Management Systems (WMS)
● Transportation Management Systems (TMS)
● Supply chain planning software
● Data Analytics

Enhancing Supply Chain Finance Efficiency Through Technology

Below, we have rounded up the 5 major benefits of technology in supply chain financing.

1. Streamlining Supply Chain

In the entire supply chain process, technology makes data easily accessible by organizing the information in a software. It brings the entire data into one place so the company can quickly access it and also share it within the company or with a third party as and when needed. This prevents mistakes in planning, execution, and delays in making decisions.

2. Getting Better Information

In order to make a smart and good decision, it’s very important that you understand it in the best way possible. In SCF, technology makes it easy for you to understand the data and its potential in your business operations. It helps you understand the data, know what it means exactly, and take action accordingly. That way, you can fix your problems and mistakes before they become big ones.

3. Being More Flexible

The biggest advantage for any firm today is having good information and the ability to understand what’s happening. It leads to being flexible and dealing with processes more effectively. If there are problems in the company or the supply chain, they can be fixed quickly. Without this, a business can’t be very flexible.

4. Working Together Effectively

In a big company where so many people are working together in different departments, working in harmony as a team is very important. Though divided, everyone works in sync to reach a common goal.

Technology in SCF helps everyone work in harmony by keeping track of what is happening and making sure everyone has the right information. That way, different people can make decisions for a common goal.

5. Customer Loyalty

In today’s business landscape, finding new ways to win customers is just another marketing tactic that can go a long way. Now, organizations are realizing that managing the supply chain the right way can help them win customers and their loyalty. This is even more important for entities with so many stakeholders.

Also Read: The Future of Supply Chain Financing

Upcoming Trends in Supply Chain Finance Technology

The following are some of the upcoming trends in supply chain finance technology:

Going Digital in Supply Chain Finance

In the coming years, businesses will have access to many tech-driven solutions. These solutions won’t just provide quick loans but also make it easier for businesses to manage payments in a supply chain that’s usually a bit messy.

Large Options To Choose From

In the years to come, businesses will have a plethora of options to choose from for their financing needs from banks to NBFCs. This would imply that the players would have a huge invoice financing pool from which to pick.

Securing Businesses and Becoming More Efficient

In the future, firms will focus on correcting errors and improving the supply chain finance process. This will result in a comprehensive framework for risk management and reduction.

The Credlix Advantage

Experience a transformative approach to supply chain financing with Credlix! We offer tailored financing solutions powered by cutting-edge technology and an extensive lending network to meet your business’s unique needs.

Final Words

In the arena of supply chain finance, technology has been a game-changer. It has streamlined processes, increased transparency, and reduced costs. It’s changing the landscape of how SCF was witnessed earlier. Between all these changes, Credlix emerges as a major player in offering customized financing solutions driven by innovative technology and a robust lending network.

Also Read: What is Credlix? Explore the Supply Chain Financing Platform

Learn More about: Supply chain financing

Get access to immediate WORKING CAPITAL

Do You Export?*
Notification method