Top 5 Supply Chain Finance Technology Trends in 2022

Supply Chain Finance is a cash flow solution that helps businesses free up their working capital trapped in the supply chains. Supply Chain Finance is a short-term working capital solution that suppliers can avail to optimise their working capital requirements.

The top supply chain finance technology trends currently emerging in 2022 are:

Collaboration of Human Capabilities with Advanced Technologies

With human capabilities like logical implementation, critical thinking, client relation, etc., advanced technologies are automating the entire process of payment exchange, data analysis, documentation, etc., that would take supply chain finance to another level.

The innovative technology platforms provide real-time visibility of the multiple activities, building an overall efficient system, payment history, credit line utilisation, financing period, etc. Businesses and financial institutions will leverage easy access to all the required information, ensuring faster trade flows.

Employing Technology to Build Larger Network of Suppliers

The augmented digitisation and collaboration would create a wide and diverse network of suppliers and financers for businesses. The year 2022 would witness a massive shift and expand the reach of supply chain finance with multiple players offering instant financing, less documentation, and other value-added services. As the digital platforms provide a vast pool of suppliers, the buyers would get more supplier options, have a higher negotiation hand, and could avail themselves of attractive discounts.

Process automation and digitisation will transform the legacy systems where financial transactions took ages to complete. The robust technology platforms would ease communication, making fund transfers seamless, thereby enabling buyers and suppliers to manage and track things faster. This would also provide better access to financing by engaging banks and NBFCs.

Risk Management Solutions

The pandemic highlighted the risks associated with supply chain finance as organisations struggled with the business disruptions. In 2022, businesses would work towards creating a cohesive supply chain finance ecosystem with improved risk-management and risk-mitigation processes.

Moreover, devising technologies such as artificial intelligence (AI) and machine learning would help assess credit risk and real-time prediction of frauds and threats. Such platforms would provide factual data and accurate evaluations through which businesses could get the best proposal from their suppliers, thus assisting in prudent decision making.

Switching to Electronic Format

The new-age technology platforms would make the entire supply chain finance process paperless, minimising the requirement for any manual intervention. Such tech-driven platforms backed by data analytics will help build better relationships between the businesses and their suppliers.

In a nutshell, technology would automate the entire process of exchanging relevant information, documents and payments among buyers, suppliers, and financial institutions. It thereby enhances the visibility of the overall supply chain finance process for all the parties.

Leveraging Technology for Improved Client Relationship

Advanced technology would create seamless systems that would allow the buyers, suppliers, and financial institutions to process information faster with real-time communication, providing higher efficiency to the overall process.  

The suppliers would have improved selling capability thanks to reduced payment cycles. In traditional systems, the payments were usually received in 45-90 days, while digital supply chain financing platforms will reduce such periods to 30-40 days.