The Global Supply Chain Finance Forum (GSCFF) has released a new guidance document, ‘Market Practices in Supply Chain Finance: Receivables Discounting Technique’. GSCFF advise that this is the first in a series of industry guidance documents intended to provide clarity and consistency to the world of supply chain finance.
Supply chain finance is one of the fastest growing trade products, however, financial institutions often don’t use similar terminology or accounting techniques. The Forum, comprised of BAFT (Bankers Association for Finance & Trade), Euro Banking Association (EBA), Factors Chain International (FCI), International Chamber of Commerce (ICC), and International Trade and Forfaiting Association (ITFA), is issuing a series of guidance documents based on its 2016 Standard Definitions for Techniques of Supply Chain Finance to get all industry stakeholders on the same page.
The guidance document focuses on receivables discounting – a technique and form of receivables purchase, flexibly applied, in which sellers of goods and services sell individual or multiple receivables (represented by outstanding invoices) to a finance provider at a discount. A copy can be found here GSCFF Receivables Discounting Common Practices.pdf