Market penetration of supply-chain management is only at 10% globally according to McKinsey, and only 30% of businesses worldwide have supply-chain financing computing according to Deloitte. Prevalently in the world, there is a lag between payment to buyers from suppliers, which was due to the financial crisis in the 1990s as companies tried to stretch internal resources. Supply-chain management can help improve the cashflow between suppliers and buyers by making payments fast and convenient for buyers. Fortunately, companies are realizing these benefits, and supply-chain financing is growing. Fintech firms are driving this growth due to the ease of the platforms they offer.
Fintech firms are shortening payments by paying sellers on behalf of buyers. Once a buyer approves of an invoice, it is sent to the fintech lender, who then pays the supplier at the agreed date. The fintech lenders are also able to pay buyers on a earlier date less a discount, which are minute due to low interest rates, short financing periods, and risks only associated with the market. Although banks offer this kind of financing, fintech firms are able to help out smaller businesses, meeting the need of the growing market.
How Fintech Firms are Helping to Revolutionize Supply-Chain Management
This is interesting given the fact that supply chain is a big part of businesses worldwide. I definitely think that by improving the supply chain, especially through FinTech, more companies are able to focus on the content of the business, rather than daily operations (such as operations between buyers and sellers as mentioned).