The recent economic challenges have accelerated the need for businesses to focus more on supply chain management, and in many cases, this requires added support from banks. Vikram Gupta, the head of the banking product engineering group at Oracle Financial Services explains that access to capital can be a challenge, and the pandemic has only highlighted the issues of transactional risks further. Gupta highlights that nearly every industry has experienced some level of impact and many small businesses have found it particularly challenging for working capital due to low demand, extended payment terms and increasing inventory levels. The innovation and efficiency from digitalisation play an important role in supporting a business-enhancing working capital, but banks can also play an important role. Gupta explains that banks can provide an alternative, low cost and less document-heavy form of financing, like supply chain financing. Gupta emphasises that funding can even be applied to vendors or dealers, and the corporate’s balance sheets.

Based on these details, Oracle Financial is offering a new supply chain finance service to support banks in delivering more flexible financing options. Providing early funding to supplier corporates or extended payment terms are other ways to support working capital plans. Banks are in a unique position, with details covering every payment going to their corporate client’s account. Understanding when invoices are raised and where capital is required is the area that should be focused on a growth and partnership model. By leveraging balance sheets, smaller corporates will have more affordable and quicker access to working capital, which in turn enables banks to generate added revenue streams from interest and fees.

Supply Chain Financing

Gupta explains that there are several important factors to consider in terms of automation with SCF. This includes managing physical documents and converting them into specific inputs for a business process and automating business processes for quicker turnaround times. To do this, a range of innovative technology is required, including natural language processing (NLP) which converts documents into on-screen information and AI-focused services to reduce human error. Having real-time details of information for the end customer and the bank’s operational users enable everyone to use the same information and provide clarity on the status and predictability of cash flow. 

Identifying unmatched payments continues to be the biggest challenge in supply chain finance right now, Oracle’s focus on automating and streamlining this issue has made tracking simpler. The oracle platform can identify the groups associated with the payment and match them with outstanding invoices and finances in real-time, while at the same time, provide instant status updates to corporates and banks.

Reducing Disruption

Any software changes on a bigger scale have to be capable of connecting with existing systems used by businesses and Gupta explains that Oracle can do this with little disruption. Oracle’s experience with banks enables it to deliver solutions that can be easily integrated and transformed within a business.

Gupta highlights that their strategy is to create an API for everything, meaning the applications are open to receive and provide information from legacy systems in a bank’s system. 

Capital Access

Whether it be poor borrowing costs or lack of strength in balance sheets, capital access has always been challenging for smaller businesses. Smaller companies also face further challenges due to changes in account payables and account receivables. The speed at which you manage funds can determine the winners in this industry, according to Gupta. Gupta highlights that generating money churn through the business is how any business generates more money. Based on the current climate, the need to streamline activities and reduce complex processes is critical. Gupta highlights that in the current conditions, every bit of money that can be collected and any government funding that can be utilised will have an impact.