Making the cash flow faster

The integration between financial transactions and supply chain management is becoming increasingly important as supply chains become more complex and stretched across international boundaries.

Jonathan Speight, HSBC head of supply chain business Asia-Pacific, said the traditional physical supply chain involved the movement of products and materials from one place to another, while the financial supply chain covered the payments side of trade. This applied from the moment a purchase order was made to the time of settlement and the various financial transactions in between.

Mr Speight said the financial supply chain was where a growing number of businesses were looking to provide a better and faster service to their clients at a lower cost. He said over the past few years, tremendous strides had been made in supply chain efficiencies, sharply reducing lead times, lowering inventories and offering more responsive and improved customer service but, until recently, financial flows were still performed in much the same way as they were 20 years ago. This involved using letters of credit and supporting paperwork that required time-consuming manual checking and processing.

'Because of the availability of technology, the financial supply chain is entering a new era of evolution. Automation solutions provide a fast and secure system that can significantly reduce processing costs,' Mr Speight said.

Automation solutions also offer visibility along the supply chain, which means less uncertainty in accounts receivable and accounts payable, which leads to a reduction in working capital needs.

Technology can also help to accelerate the process of procuring goods, which accelerates payment and invoice processing.