What Is Dealer Financing?

Supply Chain Finance "Supply Chain Finance" refers to the core companies in the supply chain and their related upstream and downstream supporting companies as a whole, and based on the trading relationships and industry characteristics of the companies in the supply chain, develops an overall finance based on the right to goods and cash flow control A financing model for the solution. Supply chain financing solves the problems of upstream and downstream enterprises' difficulty in financing and difficult guarantees. By opening up the upstream and downstream financing bottlenecks, it can also reduce the supply chain financing costs and improve the competitiveness of core and supporting enterprises.

Supply chain financing

Supply Chain Finance "Supply Chain Finance" refers to the core companies in the supply chain and their related upstream and downstream supporting companies as a whole, and based on the trading relationships and industry characteristics of the companies in the supply chain, develops an overall finance based on the right to goods and cash flow control A financing model for the solution. Supply chain financing solves the problems of upstream and downstream enterprises' difficulty in financing and difficulty in guaranteeing. Moreover, by opening up the upstream and downstream financing bottlenecks, it can also reduce the supply chain.

Supply chain financing and "

Synthesizing the research results of relevant units and institutions with practical experience in the field of supply chain financing in China, we can draw several essences of the supply chain.

1. Supply chain financing actually bundles responsibilities with powerful core companies, effectively controls capital flow and logistics related to the industrial chain, and addresses the financing needs of different companies such as suppliers, distributors and end users on the chain. Self-reimbursement for sales of goods

1. Supply chain financing is different from traditional financing business, and its essence is the change of credit culture of banks or financial institutions.

2. Supply chain financing is different from supplier financing.

3. Supply chain financing is not a single financing product, but a serial combination of various products.

4. Supply chain financing focuses on the flexible use of financial product and service supply chain financing.

5. The objects of supply chain financing are limited to supporting companies that have close relationships with core companies and have commodity trading relationships.

6. Supply chain financing includes many specific business models, each of which contains different products.

7. Supply chain financing can greatly reduce business risks.

8. The operational risk of supply chain financing business has increased.

9. Need to dynamically analyze the state of the enterprise.

10. From the perspective of business development and risk prevention, banks or financial institutions should be established with core enterprises.

Supply chain financing not only allows SMEs to be affordable, but core companies in the chain can also receive business and fund management support, thereby improving the overall quality and stability of the supply chain, and finally forming a multi-party relationship between banks and supply chain members.

First streamline the information flow, capital flow and logistics of related companies in the supply chain; banks and financial institutions will use the stable and supervisable information on receivables and payables and cash flow to link the flow of funds from banks or financial institutions to the logistics of enterprises , Information flow for information integration; then banks or financial institutions provide enterprises with integrated and integrated business services such as financing and settlement services. The unified management and coordination of logistics, capital flow and information flow enables participants, including enterprises in the supply chain, and banks or financial institutions to share their own "cheese", thereby further improving the efficiency of supply chain management. At the same time, warehousing and logistics companies can help financial institutions reduce credit risk through direct control of materials.

Under the supply chain financing model, once the enterprises at the nodes of the supply chain have the support of banks or financial institutions-the "umbilical blood" of funds enters the supporting enterprises. This is equivalent to entering the supply chain, which can activate the entire supply chain and enhance the market competitiveness of the supply chain. The supply chain financing model is: In the financing model of SMEs, the traditional financing model treats the upstream and downstream enterprises in the supply chain separately, granting credits and managing them separately. However, the scale of upstream and downstream enterprises is not large, and the credit difficulties and risks are very large. Supply chain financing is a model that relies on core enterprises and regards the upstream and downstream of the supply chain as a whole, and provides financing services to suppliers and distributors who have long-term cooperation with core enterprises. The key point is to firmly grasp the core business of the supply chain and the upstream and downstream business business models. Through the data sharing between the core enterprise and its upstream and downstream partners, the risk of information asymmetry is reduced and the sensitivity of bank risk control is improved.

Four factors determine the long-term existence of supply chain financing programs.

First, the needs of the bank's own development. With the continuous reform of the financial system and the accelerated entry of foreign banks, Chinese banks are facing increasingly market-oriented financial markets and increasingly homogeneous financial products. Maintaining their core customers and developing new customers requires continuous innovation by banks, especially It is the innovation of financial products. Excessive development and introduction of new financial products will make it difficult to control risks. Therefore, developing financial products with lower risks is an inevitable choice for banks. Supply chain financial products rely on core companies to develop upstream and downstream SMEs. More importantly, the supply chain financial products are targeted at the SME market, and will acquire a large number of SME deposits, collection and payment, etc.

First, because the credit foundation of supply chain financing is based on the overall management level of the supply chain and the management and credit strength of the core enterprise, as the financing tools extend upstream and downstream, risks will spread accordingly. Gao Jie pointed out: In this case, although the biggest financial benefits will be concentrated in the core enterprises, the risks are also relatively concentrated. Because if a member of the supply chain has a financing problem, its impact will spread very quickly throughout the supply chain. As the biggest beneficiaries of the supply chain, core enterprises will definitely be affected the most. So this is a considerable test for its own fund management and comprehensive management. In particular, many Chinese companies have not established a sound credit and fund management system, and supply chain finance often places high demands on the group's fund management capabilities, and a little carelessness will cause a major financial disaster.

Second, China has not established a complete credit system. Supply chain members do not have relatively reliable credit guarantees among themselves and with banks. At the same time, banks may not be able to independently complete the survey and analysis of relevant data of all companies in the supply chain, so they cannot accurately understand the overall situation of the supply chain. This will make it impossible for banks to adjust the corresponding

The risks of core companies and partners come from three aspects, industry risk, business risk and credit risk. Industry risk measures the potential prosperity and decline of the industry in which the company operates, and the potential risks to financial institutions; business risk measures the company's internal management capabilities and reflects the company's ability to pay; credit risk measures the company's willingness to pay. The cooperation risk comes from the contract risk brought about by the defects of the contract itself, and the risk of default caused by the differences of interests between the two parties.

Avoiding supply chain financing risks requires enterprises and banks to strengthen cooperation with logistics companies. Logistics companies provide information, warehousing and logistics services for the supply chain, and banks provide financing directly. In this way, the bank can take advantage of the logistics company's knowledge of the situation of the goods, reduce its own risks, the enterprise can get financing, and at the same time, the logistics company also gains revenue.

Case 1: Supply chain financing model based on accounts receivable. Carrefour is a Fortune Global 500 company with stable operations, clear payment deadlines for upstream suppliers and execution in accordance with contracts. It has tens of thousands of suppliers worldwide. Banks can use Carrefour as their core business to design supply chain financing models for their upstream suppliers. Combined with the payables and contract terms of previous years, a credit line is given to the supplier after comprehensive evaluation, and this line can be recycled after repayment. The bank needs Carrefour to pay the upstream supplier to the bank to complete a closed capital chain cycle. This supply chain financing model can alleviate the financial pressure of suppliers, while promoting banks to acquire more customers. There are several risk points:

Risks of Carrefour: Whether Carrefour will have risks such as business, tax, personnel changes, and if so, whether it can still pay the supplier's payment in accordance with the contract. In trading companies, default payment is very common. Once such risks occur, they will seriously affect the security of bank loans.

Risks of upstream suppliers: mainly manifested in Carrefour's

Supply chain financing construction bank

Ten supply chain financing products have been launched. It is understood that this series of financing products is favored by many small and medium enterprises, and many small and medium enterprises can find their own financing products here.

The top ten products of CCB's supply chain financing are order financing, chattel financing, warehouse receipt financing, factoring, accounts receivable financing, policy financing, corporate account overdraft, confirmed warehouse financing, gold and silver warehouse financing, and e-commerce financing.

Order financing: The enterprise holds the purchase and sales contract and the real and effective purchase order issued by the buyer to apply for financing from the Construction Bank. The supplier solves the problem of the initial funding shortage, and can obtain funds in advance to successfully complete the order contract.

Movable property financing: In the normal course of business, an enterprise pledges movable property approved by its own Construction Bank, deposits it with a storage company approved by the Construction Bank, and applies for a credit business with the Construction Bank.

Warehouse receipt financing: The company pledges the warehouse receipts of a professional storage company approved by the China Construction Bank and applies for a credit business to the Construction Bank.

Factoring: In essence, it is a buyout business of accounts receivable, and provides comprehensive solutions for accounts receivable for seller companies, including financing, account management, and buyer credit guarantee.

Accounts receivable financing: The company applied for financing from CCB with pledges of accounts receivable generated from credit sales.

Policy financing: Enterprises apply for financing from China Construction Bank with their China trade credit insurance policies.

Corporate account overdraft: CCB allows customers to overdraft within the agreed account and agreed amount to meet the customer's temporary financing convenience.

Confirmed warehouse financing: The supply chain core enterprise, the distributor and the Construction Bank cooperate in a tripartite manner. The bank controls the right to take delivery. The core enterprise is entrusted to store the goods and assume the responsibility for repurchase.

Gold and silver warehouse financing: Based on core corporate credit, it provides short-term financing and credit services to dealers through a combination of order financing, warehouse receipt financing, corporate account overdrafts and bank acceptance bills.

E-commerce financing: CCB's "e-loan-pass" series of products tailored specifically for e-commerce customers of Internet transactions, including "network-linked loan-guarantee", "big buyer supplier financing", and "network speed loan-link" . ^[4]

China Merchants Bank

China Merchants Bank Shanghai Branch's supply chain financing business has established three standardized products represented by "political mining loans", "commercial mining loans" and "central mining loans", and promotes small business development with product innovation. The government procurement loan business is oriented to the huge government procurement market. It only relies on the government procurement business of the enterprise and does not require the company to provide actual collateral. Commercial procurement loan is the 45-75 days commonly used by small businesses to supply shopping malls and supermarkets In the repayment account period, a standardized product was successfully designed to build a basic quota with real estate mortgages, supplemented by flowing water to increase credit; Central mining loans are targeted at financing products provided by central enterprise suppliers, and the products pass clear customer classification access conditions. , Correspondingly designed different guarantee methods, supplemented by closed-loop funding supervision and strict logical inspection, to ensure the authenticity of the order, the performance of the contract and the return of funds after repayment, and many other links. ^[5]

Supply Chain Finance Bank of China

In response to the needs of enterprises, Bank of China has found core enterprises in the supply chain, and based on the core enterprises, provides trade financing services based on the supply chain process for all parties in the supply chain. As of 2012, Bank of China has launched a series of supply chain financing products, including Rongxinda, Rongyida, order financing, sales, Rongda, Cargo, Tongyida and Rongtongda.

Rongxinda: Bank of China provides the seller with the relevant documents, relevant certificates for insured credit insurance, compensation transfer agreement, etc. for the business that the seller has insured the credit insurance with China Export Credit Insurance Corporation or other credit insurance institutions approved by the Bank of China. The financial financing business is one of the "Da" series of trade finance special products developed by Bank of China.

Rongda: Under the trade settlement business, the trade financing business handled by customers on the basis of goods acceptable to the Bank of China as pledge. The business types are limited to the financing business under import issuance / collateralization, import collection and escrow, outbound remittance (restricted cash on delivery) and China's comprehensive factoring, and can gradually expand to other types when conditions are mature.

VTech: At the customer's request, Bank of China accepts international / Chinese letters of credit (L / C) that have been promised by the issuing bank or its designated bank (including the confirming bank), or have been guaranteed by the guarantee bank. Accounts receivable under the acceptance document collection (D / A) are pledged, and various types of trade financing and guarantees (including standby letter of credit) for the customer (excluding import factoring, China comprehensive factoring (buyer) ) And financing guarantee / standby letter of credit business).