International Coalition Releases Guidance on Supply Chain Finance

The Global Supply Chain Finance Forum—which includes BAFT, ABA’s global transaction banking subsidiary—today released a new guidance document on receivables discounting technique. The paper is the first in a new series intended to provide clarity and consistency on supply chain finance practices, an area where financial institutions do not always use the same terminology or accounting techniques across borders.

Receivables discounting is a 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. “Our hope is that this guidance will lead to an industry-wide, uniform adoption of the receivable discounting technique,” said Christian Hausherr, who is the European product head of supply chain finance at Deutsche Bank and chairman of the Global Supply Chain Finance Forum. “When all parties use similar techniques and terminology, it makes for a more streamlined and efficient process.”