Because companies operate their supply chains on a global basis to compete, they are much more concerned about managing inventory and working capital.

There are other forces driving opportunities in supply chain finance. To begin with, companies are rapidly increasing their planned direct imports and global procurements. This has major balance sheet implications, as many companies are accruing in-transit inventory at some point overseas. In addition, use of third parties to manufacture outside of the U.S. has exploded, while Internet-based technologies enable real-time exchange of information between trading partners about product and business data.

We found the market is in the early stages of migrating to data triggered finance. These 6 triggers include:

Trigger #1: Purchase Order Issuance
While suppliers desire more offshore funds access, traditionally pre-shipment finance has been seen as a pure supplier responsibility and the local Asian bank domain. There are some banks that are playing in this space using buyer Master Purchase Orders for working capital facilities for key suppliers.

Trigger #2: Work in Progress Payments
We found a small number of large (usually regional or global) banks with buyer support programs and Master Purchase Order contracts with medium to large Tier 1 and 2 suppliers who have performed well to contract over many years.

Trigger #3: Vendor Managed Inventory (VMI)
Many high tech manufacturers in the 'made to order' business are using Vendor Managed Inventory programs. Lead Logistic Providers and major 3PLs are behind these programs and there will be a growing interest in trigger finance/payment when inventory is pulled from a warehouse.

Trigger #4: Inventory in Transit Financing
There are a select few vendors that are going beyond the GT Nexus, Inttra and Tradebeam supply chain visibility models to enable international in transit inventory to be funded on a non-recourse basis to emerging market suppliers.

Trigger #5: Proof of Delivery via Forwarder Cargo Receipt (FCR) and other documents
As more cargo is exported with electronic messages such as FCRs and advanced shipment notices, there will be more opportunities to develop liquidity off these messages. This trigger remains to be explored and developed.

Trigger #6: Buyer approved Invoices
This is a post-shipment finance model that basically works like this: Bank provides overseas supplier early payments as financing from buyer accepted invoices. Buyer interfaces their AP or creditor ledgers to the Bank's working capital platform, which makes available to their suppliers approved payables that are both date and value certain.

The market is moving away from documentary based trade (Letters of Credit, etc.), making way for Open Account opportunities in supply chain trade finance structure. The time for your company to make the transition is NOW.