As the financial crisis of 2008 unfolded, companies across the globe were reminded that having a healthy stockpile of cash on hand was critical during times of uncertainty. And as global competition heats up, companies are scrambling to create more working capital to maintain and boost company performance. This has exposed a clear gap between current working capital management solutions and the changing needs of companies worldwide.
One strategy companies have been using is supply chain finance, which enables companies to extend payment terms with their supply chain and pay their invoices later in exchange for a small discount. Traditionally, companies relied on banks to develop a supply chain finance program that can help them unlock working capital from within their supply chain. However, these programs have relied on age-old techniques, hitting only a fraction of its potential.
Recent technological advancements paired with these growing demands have accelerated the growth of financial technology (fintech) companies focused on transforming the way companies do business with their supply chain and approach working capital. Utilizing advanced strategies, embracing new technologies, and harnessing the power of data are some ways these fintech companies are changing the game.