As the new force of national economy, China's small and medium-sized enterprises have developed rapidly in recent years. According to statistics, the number of small and medium-sized enterprises in China has exceeded 30 million, and the number of individual small and medium-sized businesses has exceeded 70 million. More than 50% of the country's tax revenue, more than 60% of its GDP, more than 70% of its technological innovations and more than 80% of its workforce are generated and contributed by them. However, compared with large enterprises and state-owned enterprises, the resources occupied by small and medium-sized enterprises are far away. In particular, the problem of financing difficulty and high financing seriously restricts the healthy development of small and medium-sized enterprises. Although the central and local governments have issued a series of policies to support the development of small and medium-sized enterprises, financial innovation is an essential part of ensuring the implementation of policies and effectively breaking the development bottleneck. Supply chain finance has emerged in this context.

1. Concept of supply chain finance

Supply chain finance refers to financial institutions based on the understanding of the supply chain core enterprise strength and credit, to upstream and downstream supply chain structure and transaction process operation details, through strict review supply chain, the core enterprise and upstream and downstream enterprises, provide innovative financial products and services of a financing mode. Since the upstream and downstream enterprises supporting the core enterprises in the supply chain are mostly small and medium-sized enterprises, it can be said that supply chain finance is the financial service developed for small and medium-sized enterprises.

Supply chain finance was first introduced in China by shenzhen development bank in 2006. It provides a package of financial solutions for supply chain enterprises and puts forward the concept of "pool financing", which covers all links of the supply chain including accounts receivable, accounts payable and inventory, focusing on the development of business under the supply chain finance mode. After shenzhen development bank, China's major Banks have been involved in this business.

2. Operation mode of supply chain finance

According to the financing activities of enterprises under different conditions, the representative financing modes in supply chain finance mainly include the following:

(a) accounts receivable financing

Accounts receivable financing is mainly applicable to the upstream financing of core enterprises. If the financing enterprise's products have been sold, but it has not yet received the payment for goods from the downstream enterprise, it can pledge its accounts receivable and sign a contract with a bank or other financial institution to obtain financing from the financial institution within the time limit and limit agreed in the contract. The operation points of this mode are as follows: first, delivery is needed to realize the transfer of property right and make the sales contract effective; Second, it is necessary to verify with the core enterprise to obtain the right of the core enterprise.

(b) confirmed warehouse financing

Confirmed warehouse financing is mainly applicable to the downstream financing of core enterprises. Refers to the enterprise from the bank and other financial institutions to obtain credit, after paying a certain percentage of the margin, the financial institutions can pay the financing enterprise's upstream production enterprises. The upstream production enterprise shall deliver the goods in accordance with the purchase and sale contract, and the goods shall be transferred to the warehouse receipt as collateral for financing. If the financing enterprise fails to return the exposure of the financial institution, its upstream producer shall be responsible for repurchasing the pledged goods. The confirmed warehouse financing model not only builds a bridge of cooperation between Banks and enterprises, but also enables financial institutions, as financial service providers, to be organically incorporated into the industrial supply chain system.

(c) accommodation financing

Financing of warehouse means that the financing enterprise first takes its inventory (including raw materials, finished products, etc.) as collateral to apply to financial institutions for financing. The logistics company provides financing warehouse for the pledged goods, and provides a series of services such as commodity storage and supervision, value evaluation, financing guarantee, logistics distribution and commodity disposal. Then the financing enterprise in the process of its production and operation or inventory sales in the process of phased repayment. To a certain extent, this mode solves the pain points such as excessive inventory and slow turnover of smes, and makes reasonable use of inventory to turn it into a means of financing.

3. Main risks in supply chain finance

(a) operational risks of supply chain enterprises

Supply chain finance mainly depends on the core enterprises, so the operating status of the core enterprises is very important. If its business situation is affected by macroeconomic, industrial environment, its own operating ability, management ability and other factors, a crisis will change the ecological environment of the whole supply chain enterprises, which may lead to the paralysis of the whole supply chain financial business. However, small and medium-sized enterprises have their own limitations in operation and management. If their operation status is not good, it will affect the core enterprises in turn and transmit their risks.

(b) supply chain stability risk

The stability of the core enterprise and its upstream and downstream enterprise cooperation is one of the prerequisite of supply chain finance operable, and the core enterprise usually has a strong position, the weak position of small and medium-sized enterprises determines the possible relationship with the core enterprise is not close, if the market shock or have a better alternative enterprises, the supply chain can change at any time. In addition, the core enterprises usually set up upstream and downstream networks for the sake of cost and benefit, lacking supervision and assessment mechanism. If one member of the supply chain has a problem, it will have an impact on the whole supply chain.

(c) operational risks within financial institutions

Because of supply chain finance business involving the whole industry chain, wide coverage, demand diversity, so you need to financial institutions from the customer demand, product design, credit investigation, operation implement, post-loan inspection before each link of the whole supply chain, including raw materials procurement, production, logistics, product delivery and so on various steps have a deep understanding and grasp, to avoid risk points, money back safety.

(d) inadequate legal and credit systems

The products and models of supply chain finance are constantly innovating, and the standardization degree is low compared with the traditional business. Although the contract law, guarantee law and property law have been issued successively in China, only some regulations restrict and regulate some links of supply chain finance, and the legal system is not complete. Supply chain finance needs legal support in legal texts, credit bundling, inventory supervision and collateral disposal, and the legal system needs to be further improved.

4. Risk prevention of supply chain finance

(a) selection management and strict access of industrial chain enterprises strict access criteria should be adopted when conducting supply chain finance business. The second is to focus on the core enterprise's business ability, the management ability of upstream and downstream enterprises and the ability to assist Banks; The third is to choose small and medium-sized enterprises in the supply chain that have a long-term cooperative relationship with the core enterprises and are closely linked to cooperate.

(b) choose pledges carefully

Collateral is an important guarantee for the development of supply chain finance, and its liquidity to a certain extent guarantees the fund security of financial institutions. Therefore, financial institutions should cooperate with professional evaluation companies and logistics companies to make fair evaluation on the value of pledged goods and choose the characteristics of different assets. If you choose inventory as collateral, you must ensure that inventory ownership is clear, easy to realize, easy to store; If you choose accounts receivable as collateral, you should ensure that it has a real trade background and easy to endorse and transfer; If the choice of advance payment, should ensure that the upstream enterprises have sufficient supply and core enterprises have the ability to repurchase.

(c) improving the legal and regulatory system

At present, the development of supply chain finance is deepening day by day with continuous innovation of products. The imperfect legal system restricts the further development of supply chain finance to a certain extent, and also produces some legal risks. Therefore, relevant departments in China need to further improve the relevant laws and regulations of supply chain finance to provide legal basis for the business development and dispute resolution of supply chain finance.

(d) improving the credit system

A good credit system can reduce information asymmetry and provide real data and conditions for supply chain finance, so as to support the development of enterprises with good credit and further foster a good credit environment.

Source: henan business daily