Supply Chains are still weathering stormy weather. The challenges of the last years continue, “crises mode as the new normal” still proved to be a hot topic in 2024. New crises are constantly emerging, including further restrictions on important shipping traffic in the Suez Canal, the Middle East conflict, and its expansion through terrorist attacks by Houthi rebels in the Red Sea, as well as political developments causing uncertainty, for example in Europe and the USA.  

Thus, economic, environmental, geopolitical, societal, and technological risks are increasing, interconnected, and interacting with each other. They create a new environment and require new frameworks for managing both the physical and financial flows across global supply chains,  including new models for Supply Chain Finance. 

New environments and frameworks for Financial Supply Chain Management are here to stay. This defines a few fundamental changes to our current view, like  

1. Climate change and geopolitical risks must be considered as structural forces, not as risks.  
2. Trade-offs between globalisation, reshoring, friend-shoring and decoupling must be continuously balanced.  
3. Disruptive risks and crisis mode must be viewed as the new normal.  
4. ESG-compliance and sustainability investments must be seen as opportunities.  

This happens against the backdrop of an unstoppable rise of technology like AI. Nowadays all necessary technology is available – the challenges include, the willingness of all stakeholders to increase transparency, their ability to be open to new technologies and the adoption of these technologies for financial services.  

But the unrealised potentials of technology in Finance must be leveraged:  

1. The overabundance of technology must be exploited for the first time in history.  
2. Technology gaps between shop floors and top floors must be bridged.  
3. The evolution of Digital Twins must be pushed to develop a financial brain.  

The widespread adoption of new technologies offers numerous benefits, including cost savings, enhanced accuracy, and accelerated payment processing. By digitizing shop floor processes, businesses can streamline their financial operations, reduce manual errors, and improve cash flow management.   

The decisive question is: How to deal with such continuous challenges? The answer is the following key requirements for  future-proof Supply Chain Finance:  

1. Working capital must be safeguarded against changing regulatory frameworks and complexities.  
2. Financial supply chains must be stabilised in the deep tiers.  
3. The potential of digital currencies and programmable payments must be evaluated.  
4. Widespread introduction of e-invoicing must be supported.  
5. Supply Chain Finance must be seamlessly integrated into payment and asset finance structures.  

Integrating a broader scope of supply chain finance solutions into payment and asset finance structures enhances the efficiency and liquidity of financial operations. By leveraging supply chain finance techniques, businesses can optimise their working capital and strengthen relationships with suppliers and buyers.

Improving cash flows and securing liquidity without involving suppliers, and without affecting existing ERP-Systems, meets important requirements of corporate financing. 

Seamless integration of supply chain finance requires interoperability between operational technology and financial systems. It also needs standardized processes and clear contractual agreements. By aligning the supply chain dynamics of shop floor processes with payments, supply chain finance and asset finance structures, businesses can unlock synergies and create value across the entire value chain.  

In conclusion, navigating the complexities of modern financial management requires a strategic approach that addresses regulatory compliance, supply chain stability, technological innovation, and operational efficiency. By embracing the aforementioned 12 hypotheses and leveraging them as guiding principles, businesses can adapt to changing environments, seize opportunities, and achieve sustainable growth in an increasingly interconnected world.  

We discussed these hypotheses about the future of supply chain finance in an interactive workshop with the participants of the Supply Chain Finance (SCF) Community event in March 2024 in Munich. We would be happy to continue the discussion with the readers of this article.