Business closure refers to the head-to-tail connection, the formation of a loop to maximize efficiency and reduce costs, which is the primary condition for supply chain financial operation. The overall activities of the supply chain should be organically connected and run in an orderly manner, including the discovery of value, production of value, transmission of value and realization of value, which form a complete loop.
Supply chain operation is the core and prerequisite of supply chain finance. Once the supply chain operation fails to achieve closure, and value production and realization deviate, potential problems and risks will emerge. The complete closure of the above diagram determines the foundation of supply chain finance, i.e. the competitiveness and profitability of supply chain operations.
Here we need to focus on the distinction between closure and closure. Closed-loop means that all value activities as well as operational activities are realized within the enterprise. For example, an enterprise finances SMEs, but requires SMEs to use their own production resources provided by them, and to fix the supply of channels provided by them. While closure can control risk, tying other firms into its own system is bound to create conflicts of interest. Closure, on the other hand, makes full use of open social resources to realize the value of the platform and risk managers can be fully coordinated and managed, more conducive to the creation of a supply chain ecosystem, but also easy to be accepted by other collaborators.
When designing and operating supply chain finance, it is also important to consider all the factors that may affect the closure of the business, which are mainly from the macro level and micro level factors.
1. Macro level
Macro level factors mainly refer to macro systemic risk. Supply chain operations may be interrupted due to uncertainties in the economic, political, legal and other environments, which prevent the realization of a recyclable and closed operation. In the context of globalized markets, supply chain finance activities are more prone to this problem.
There is no such thing as a perfect market, and in a world where globalized organizations and national regulations coexist, trade frictions are inevitable and obstacles to production operations can arise. Therefore, companies need to design a fast and flexible supply chain system as a way to cope with the impact of various factors on the closure of the supply chain.
2. Micro-level
Micro-level factors refer to industry or regional systemic risk. Supply chain finance must be carried out based on a particular industry or a region. The industry and regional characteristics of supply chain financial services must have an impact on the operation of the supply chain.
In terms of industry impact, supply chain finance should be carried out in industries that continue to develop stably, while for those restrictive or decaying industries, supply chain finance will have huge risks.
In terms of regional factors, the region's economic development prospects, market transparency, level of government services, and the stability of the regional environment can have a significant impact on business closure.
The informatization of transactions is an important factor affecting the risk of supply chain finance, which is mainly manifested in the informatization between enterprises or organizations and the informatization of supply chain operation process management.
1. Informatization between enterprises or organizations
Informatization between enterprises or organizations is also divided into two aspects. First, the enterprise cross-functional information communication, such as the sales department to provide timely feedback on the implementation of the project feedback form, the production department to provide timely feedback on the operation of the project and so on. If the enterprise can not do informationization and digitalization within the enterprise, can not form an effective transmission, it is bound to generate risk.
The second is the information communication between the upstream and downstream enterprises in the supply chain or between the financial service organizers, such as the core enterprise and the relevant enterprises for information exchange, effective coordination between financial institutions and enterprises, etc., once there is no standardization and exchange of information between the dissimilar industries, the supply chain operation is a shell, the financial institution's earnings will be affected, and then the whole supply chain is affected by the ripple effect.
2. Informatization of supply chain operation process management
Informatization of supply chain operation process involves the ability to grasp the supply chain's operation status and correct information in a timely manner. This point includes many aspects, such as online approval and networking management of financial services, the use of logistics and financial services on-site operation software systems and other Internet technologies.
Income self-reimbursement refers to the characteristics of self-reimbursement trade finance, which refers to the provision of short-term financing to enterprises in the chain based on their real trade background, supply chain process and upstream and downstream comprehensive business credit strength, and the future stable cash flow of the enterprise as a direct source of repayment. Although it is the same short-term financing as liquidity loans, the difference between self-reimbursable trade financing and its credit concept and credit management is obvious.
In terms of credit concepts, self-sustaining trade finance focuses on the authenticity of the trade background, effectively locks in the logistics and capital flow of the enterprise, and matches the term strictly with the trade cycle, with obvious self-sustaining features. In terms of credit management method, self-reimbursable trade financing focuses on the customer's debt rating results, combined with specific product authorization control, which is relatively much looser. In addition, from the point of view of credit results, working capital loans are mostly single credit, while self-reimbursable trade finance is credit line, which meets the batch and turnover of trade.
Self-reimbursable trade finance products contain strong risk control at the beginning of the design, and the main risk control measures include the following:
(1) Cautiously measure the value of goods based on the condition of the goods, the price of the goods of the same quality in the same industry, and the market conditions and other factors, and set up a strict system of access to the goods or varieties of goods.
(2) The granting of loans should not be treated in a generalized manner, but rather the value of goods should be divided according to the ease of realizing the goods and the degree of price stability, and the loans should be granted in this way, and at the same time, the precautionary measures in case of a decline in the value of the goods should be agreed upon, such as the addition of goods or guarantees.
(3) Make the shareholders or main management of the client enterprise increase their personal joint and several guarantee and asset guarantee responsibility, so that they can be more careful and prudent in the management process and prevent individualistic behavior or slack behavior.
(4) Release controlled goods based on the return of the loan.
(5) Guarantee the financing object through a powerful party in the trade relationship, realizing the bundling of responsibility for it, so as to effectively control the risk.
Management verticalization, also known as management specialization, refers to the implementation of professional management of supply chain activities, the purpose is to clarify the responsibilities, control the supply chain process, and so that the various management departments do not duplicate each other, mutual constraints. Therefore, the management system to achieve the "four separations".
(1) The separation of business approvals and operations can effectively avoid the risks associated with quick success and blind expansion.
(2) Separation of transaction operation and logistics supervision means that the main body engaged in supply chain transactions can not be engaged in logistics management at the same time, in particular, the implementation of logistics supervision of the goods in the transaction.
(3) financial business development, implementation and supervision of the separation of the "separation of powers", in the setup of the organizational structure of the operating unit to take the development, operation and inspection of the principle of three-way separation, and the work of the departments to do a clear division of labor.
(4) Separation of business unit and enterprise headquarters deliberations refers to the approval of supply chain financial business to implement the business unit and headquarters of the two levels of collective evaluation system. Through the establishment of a review committee to review specific projects, and for some specific business to designate a specialized reviewer or the head of the management department to carry out the review, and finally according to the risk level reported to the leadership for approval by the leadership of the collective decision-making. Through the layers of approval, maximize the understanding of the supply chain operation, to avoid financial risks.
In the process of carrying out supply chain finance business to realize the risk of structuring, which refers to the rational design of business structure, and the use of various means to resolve the possible risks. The structuring of risk needs to consider the following aspects:
1. Insurance
To diversify the business risk, insurance is a good program. A sound financial insurance risk diversification program should effectively combine various types of insurance, such as customer credit insurance, property insurance, third-party regulatory liability insurance, and employee good faith insurance. Such a combination is more common in countries with a more developed market economy, but China is still in the early stages of the market economy, the integrity of the economy has not yet been fully established, this combination of insurance still needs to be explored.
2. Guarantees and commitments
In supply chain finance, the guarantees and commitments of different participants or subjects should be taken into account, including the guarantees and commitments of the financing demand side, the joint and several guarantee side, the general guarantee side, and the guarantee commitments of other stakeholders.
3. Agreement
For supply chain finance business to be carried out smoothly and sustainably, each participant should bear the responsibility of the business in a fair and equitable manner, so the rights and obligations of each party, as well as the scope and mode of risk bearing, must be defined objectively.
4. Establishment of Risk Reserve
Supply chain finance business is characterized by high risk, which puts a lot of pressure on the financial service providers who provide financial services as well as the regulators who are involved in supervision. In order to effectively avoid losses caused by risks, it is advisable to learn from the risk reserve system of the futures market, and set aside a certain percentage of risk reserves. In this case, even if a certain loss occurs, these losses are within the controllable range, and the impact on the operation is not significant.
Reputation assets is the comprehensive impression of the enterprise to the social public, is the sum of intangible assets of the enterprise, that is, word of mouth, image, reputation, performance, industry status, public opinion response, and social responsibility and other indicators of fame collectively. The reputation assets of an enterprise need to be accumulated bit by bit by the enterprise, and can only be obtained through long-term and continuous efforts. It can be said that reputation assets are the most powerful soft competitiveness of enterprises, and in the words of Kevin Jackson, the master of reputation management, they are the most valuable assets of enterprises.
In supply chain finance innovation, reputation represents the ability, responsibility and accountability of an enterprise in engaging or participating in supply chain finance business. Only enterprises with a good reputation can promote the stable and sustainable development of financial business. Once the reputation is lost, it means that the enterprise has a relatively high moral risk, and may produce malicious and destructive behaviors, leading to disruptions in the supply chain financial ecosystem and market order. At present there are four more typical malicious financing behavior.
1. Three sets of behavior
Three sets of behavior refers to arbitrage, foreign exchange and tax arbitrage behavior. These behaviors are all aimed at obtaining unlawful financial gains. Arbitrage and arbitrage is the use of interest rate or exchange rate fluctuations, through fictitious trade and logistics to obtain the spread and exchange rate difference behavior.
Tax arbitrage, on the other hand, is the practice of saving invoices that are not needed by the end customer and selling them to other companies or using them themselves to fill sales bills. In this way, the enterprise on the one hand gained tax revenue, on the other hand can also fill the gap formed by false transactions; tax arbitrage there are other forms, such as misrepresentation of the class of goods, will be B class goods reported as A class goods, so as to achieve the purpose of tax rebate revenue.
2. Repeated or false warehouse receipts
Repeated or false warehouse receipts refers to the borrower and the warehouse party collusion, through the false opening or repeated opening of the same goods or other people's goods to open more than one warehouse receipts for the borrower to repeat the pledge to different financial institutions, to obtain profiteering.
3. Self-insurance and self-financing
Self-insurance and self-financing refers to the friends and relatives or the borrower has a close contact with the borrower for the borrower's guarantee, and the logistics and warehousing supervision of the person or the same person, or a close associate, so as to extract funds.
4. A woman marrying more than one
A woman marrying more than one refers to the borrower although there is a certain amount of assets, but due to the difficulty of information **** between different financial institutions, so that the borrower from the multi-party financing, in particular through the non-standardized private lending, maliciously enlarging their own credit, to extract funds.
In order to prevent the above behaviors that may occur, it is necessary to assess and quantify the reputation of supply chain finance participants in the process of risk identification, monitoring and control.