In recent years, the EBA has brought together practitioners and thought leaders among its Members and Associate Members to discuss and develop concepts in the area of the Business-to Business Financial Supply Chain (FSC). The FSC supports the Physical Supply Chain, and these two concepts have been described and mapped by the EBA
Research has been undertaken in the following four areas:
Supply Chain Process Mapping helps to see the process as a value chain of opportunity for companies and their FSC service providers such as banks. The maps provide information about the role of banks and other service providers in the provision of FSC solutions to customers, and demonstrate the importance to banks and other providers of taking a holistic and integrated supply chain view of their corporate customers in the development and delivery of products, services and solutions.
Please refer to the presentation “Mapping the processes and finding the opportunities” to see the supply chain process mapping undertaken by the EBA:
In this area, the EBA’s original focus was on e-invoicing, an integral part of the Financial Supply Chain. E-invoicing involves the replacement of paper invoicing with electronic invoice transmission, processing and storage.
E-invoicing has become a major public policy objective and a political priority for the EU Internal Market as well as a global trend in the business world for a number of reasons:
- Material cost savings of at least 60 percent of accounts payable processing based on paper
- an expected decrease in invoicing and payment errors (STP)
- an expected reduction in VAT fraud and irregularities
- an expected rise in productivity due to more efficient processes which facilitate faster approvals for payment and smoother supply chains in a networked world
- in line with the green agenda as dematerialisation helps to reduce carbon emissions
The EBA keeps abreast of automation and technological developments and participates in the European Multi-Stakeholder Forum on e-Invoicing. It is a mission of the EBA to promote the wide adoption of e-invoicing and support its members in taking advantage of associated opportunities.
For more in-depth information, please refer to the European market guide on E-invoicing and the publication "Electronic invoicing and the banking industry":
Beyond the invoice process, supply chain automation is providing efficiency and transparency to many other supply chain processes including procurement, purchase orders, logistics and the management of payments and remittance data.
In a tough economic environment, it is less easy to access funds through traditional channels, so banks are working to refresh their traditional lending portfolio towards one that addresses supply chain needs. This will require them to focus on how businesses are deploying supply chain management practices as a way of generating cash flow and new sources of liquidity within their own operational processes. Banks have a role in supporting working capital management through optimising their customers’ liquidity. This is the Supply Chain Finance (SCF) arena.
In this area, the EBA, together with its member community,
- is playing a leading role in the Global SCF Forum established in 2014 to create standard market definitions for SCF techniques
- is actively contributing to the harmonisation of market terminology in co-operation with other stakeholders
- reaches out to other stakeholder organisations with an interest in SCF and undertakes research and analysis of SCF topics
- monitors the evolving risk and regulatory framework and provides its members with information and updates
- brings its skills and experience to bear in the collaborative space and supports its members to develop the SCF component of transaction banking business together with its related payment, liquidity and transactional elements
- supports the above activities with its education and communication activities
EBA members benefit from learning about ways in which payments, SCF and supply chain automation can be brought together in a ‘non-silo’ way to create value for corporate users. In this regard, the EBA presents its members with a horizontal ‘end-to-end’ view of corporate supply chains as a compelling way of managing risks and opportunities in the supply of transaction banking services.
The EBA has prepared a useful guide of Supply Chain Finance:
As part of its analysis of banking opportunities along corporate supply chains, the EBA focuses on B2B payments. That is why the Association conducted a comprehensive review of the end-to-end supply chain that includes payments, as this is where banks play a major role in the order-to-cash process.
Payments in general are well covered by industry analysis and debate, especially in the clearing and settlement space. Remittance data associated with B2B payments, however, represents an area of value-add where banks could do more to help corporates improve the end-to-end reconciliation process and the efficiency of the supply chain. The ability to achieve automated end-to-end reconciliation represents a continuing and significant ‘pain-point’ for many corporates and is the focus of an increasing number of industry initiatives.
The paper “B2B Remittance Data – Challenges and Solutions” assesses the current remittance data situation in B2B payments and highlights opportunities to facilitate end-to-end reconciliation by payment receivers. Specifically it reviews the challenges faced by corporates, various industry standards and solutions, and the opportunities for banks to play a key role in helping their clients achieve optimal end-to-end reconciliation.
The EBA has published Standard Definitions for Techniques of Supply Chain Finance, which have been agreed in a joint initiative of key organisations operating in this field. The document aims to provide a common understanding of terminology, nomenclature and techniques related to supply chain finance. To access the FAQ to the Standard Definitions for Techniques of Supply Chain Finance, please click here.
For more information on the EBA’s Supply Chain Working Group (SCWG), please click here.