Big Call From Fifo Boss
Supply chain finance will become the funding model of choice for SME’s over the next five years, according to Fifo Capital boss, Wayne Morris.
It’s a big call given that the product – also known as reverse factoring – has been mired in controversy.
Supply chain finance is a way for businesses to fund their working capital and cash flow needs, but in recent times large companies have been accused of using it to squeeze small suppliers.
Critics claim companies like Rio Tinto and Telstra have forced suppliers to join their lenders’ platforms and provide discounts for getting paid on time.
Both companies have since ditched the practice.
Morris says it is crucial the supply chain finance model is used responsibly to stimulate the SME sector rather than as a big business financing tool.
He says supply chain finance works best when the supplier uses it at chosen times to fund growth and invest, so the burden and benefit of liquidity can be share throughout the supply chain””.
“Getting it right relies on the supplier being in control and maintaining flexibility – it’s intended to create a virtuous circle not further reasons for payment dispute.
Fifo Capital has invested heavily in its supply chain finance product which is aimed at SME’s rather than large corporates.
It was the first company to target this sector of the market and has been steadily growing its book.