Business Minister Mark Prisk met with heads of major businesses and finance experts yesterday to discuss the value of supply chain finance — an important step in the Government’s goal of widening the range of finance options to small and medium sized businesses.
The Government is committed to increasing the range of finance options available to businesses that are often reliant on bank lending for credit.
The green paper, Financing a Private Sector Recovery, looked at several alternative means of obtaining finance to ensure businesses are able to grow and boost the recovery. It aimed to start a dialogue with businesses and the financial services industry to develop and support alternative means of finance for small businesses.
The consultation period for the green paper closed on Monday 20 September and the Department for Business and the HM Treasury received over 160 responses. Today’s meeting marked the first stage of working with industry on ideas generated by the paper and the consultation process.
Supply chain finance has several forms but in most cases it involves a buyer organising finance based on its credit rating and on invoices approved for payment to suppliers; ensuring that businesses further down the supply chain are able to cover their working capital while waiting for payments.
Business Minister Mark Prisk said:
“Small businesses will be critical to the economic recovery and helping them access a range of finance options is essential for those firms looking to expand and grow.
“We want to work with business to find the best solutions for increasing finance to small firms, who have previously relied on banks for their finance. I am delighted to see the responses to our finance green paper suggesting alternatives to traditional bank lending, from which today’s discussion on supply chain finance has emerged.
“Today’s meeting was informative and useful. Supply chain finance is clearly an option that all large corporates should consider providing. It is one option that could help plug the funding gap of their suppliers while looking to cover working capital as they await payments. I look forward to further productive discussions on other finance options.”