Supply Chain Finance Market to Grow with a CAGR of 8.7% Globally through 2029
Supply chain finance
streamlines cash flow for businesses. Buyers can offer early payment to
suppliers, who get quick cash and better rates using buyer's credit. This boosts
supplier growth and cuts buyer costs.
According to
TechSci Research report, “Global Supply Chain Finance Market - Industry
Size, Share, Trends, Competition Forecast & Opportunities, 2029”,
the Global Supply Chain Finance Market stood at USD 5.7 billion in 2023 and is
anticipated to grow with a CAGR of 8.7% in the forecast period, 2025-2029. The
global supply chain finance market is a dynamic and rapidly evolving sector
that facilitates the management of cash flow and working capital within supply
chains. It involves financial solutions and services aimed at optimizing the
efficiency of transactions between buyers, suppliers, and financial
institutions. This market has gained prominence due to its ability to enhance
liquidity, mitigate risks, and improve collaboration across the supply chain.
Key components include invoice financing, factoring, and dynamic discounting.
Advancements in technology, such as blockchain and AI, have further transformed
the landscape by increasing transparency and reducing processing times. The
market is driven by the need for operational efficiency, risk mitigation, and
improved access to capital for businesses worldwide.
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"Global Supply Chain Finance Market”
The global
supply chain finance market is propelled by a myriad of drivers, reflecting the
complex interplay of economic, technological, and regulatory factors. One of
the primary drivers is the relentless pursuit of operational efficiency by
businesses across various industries. Companies are increasingly recognizing
the importance of optimizing working capital and cash flow management to
maintain a competitive edge. Supply chain finance provides a strategic avenue
for achieving this efficiency by streamlining financial processes, reducing
transaction costs, and unlocking trapped capital within the supply chain.
Moreover, the
escalating complexity and globalization of supply chains have heightened the
need for effective risk management strategies. Supply chain finance serves as a
crucial tool in mitigating risks associated with payment delays, defaults, and
disruptions. By enhancing collaboration among buyers, suppliers, and financial
institutions, supply chain finance helps in building resilience and flexibility
into supply chain operations. This risk mitigation aspect becomes particularly
significant during times of economic uncertainties, such as the global
financial crisis of 2008 or the disruptions caused by the COVID-19 pandemic.
Technological
advancements play a pivotal role in shaping the landscape of supply chain
finance. The adoption of digital platforms, blockchain technology, and
artificial intelligence has revolutionized traditional financial processes.
These technologies bring transparency, efficiency, and security to the supply
chain finance ecosystem. For instance, blockchain facilitates the creation of a
tamper-resistant and transparent ledger, reducing the risk of fraud and
enhancing trust among stakeholders. Artificial intelligence, on the other hand,
enables data-driven decision-making, predictive analytics, and automation,
further optimizing the supply chain finance processes.
The changing
regulatory environment also contributes significantly to the growth of the
supply chain finance market. Regulatory bodies worldwide are increasingly
recognizing the importance of supporting small and medium-sized enterprises
(SMEs) by promoting access to finance. Supply chain finance mechanisms, such as
factoring and invoice financing, offer SMEs an avenue to secure working capital
and improve their financial stability. Governments and regulatory bodies are
implementing measures to facilitate and encourage the adoption of supply chain
finance, recognizing its role in fostering economic growth and financial
inclusion.
Furthermore, the
global nature of trade and commerce has led to an increasing demand for
cross-border supply chain finance solutions. As companies expand their
operations globally, the complexities of managing transactions across borders
also rise. Supply chain finance provides a framework for optimizing
cross-border financial transactions, managing currency risks, and ensuring
timely payments across diverse geographies. This internationalization of supply
chain finance is fueled by the growth of global trade and the
interconnectedness of economies.
In recent years,
environmental, social, and governance (ESG) considerations have emerged as
critical factors influencing business practices. Supply chain finance can
contribute to sustainable and responsible business conduct by promoting ethical
and transparent financial practices. Companies are recognizing the importance
of aligning their supply chain finance strategies with ESG principles, leading
to the development of sustainable financing options and the integration of ESG
criteria into financial decision-making processes.
The rise of
non-bank financial institutions in the supply chain finance landscape is
another noteworthy driver. Traditionally dominated by banks, supply chain
finance is witnessing increased participation from alternative finance
providers, fintech companies, and institutional investors. This diversification
of the supplier finance ecosystem enhances competition, fosters innovation, and
provides businesses with a broader range of financing options. Non-bank
financial institutions often leverage technology to deliver more agile and
cost-effective supply chain finance solutions, challenging the traditional
banking models.
The COVID-19
pandemic has underscored the importance of supply chain resilience, further
emphasizing the role of supply chain finance in mitigating disruptions. The
pandemic disrupted global supply chains, leading to increased uncertainties and
financial challenges for businesses. In response, many companies turned to
supply chain finance as a means to ensure liquidity, support their suppliers,
and navigate the economic uncertainties caused by the crisis. This experience
has accelerated the adoption of supply chain finance as a risk management tool
and highlighted its strategic relevance in times of crisis.
Major companies
operating in Global Supply Chain Finance market are:
- Royal
Bank of Scotland plc
- Mitsubishi UFJ Financial Group, Inc.
- BANK OF AMERICA CORPORATION
- HSBC Group
- Eulers Herms
- Citigroup, Inc.
- BNP Paribas
- JPMORGAN CHASE & CO.
- Asian Development Bank
- Standard Chartered
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“The global
supply chain finance market is propelled by diverse drivers, including the
pursuit of operational efficiency, risk mitigation, technological advancements,
changing regulatory landscapes, and the increasing importance of environmental,
social, and governance considerations. The market's response to the challenges
posed by the COVID-19 pandemic further underscored its significance in ensuring
supply chain resilience. Additionally, the entry of non-bank financial
institutions, the internationalization of supply chain finance, and the
alignment with sustainable business practices contribute to the market's
dynamism. Overall, supply chain finance continues to evolve, offering
businesses strategic solutions for optimizing working capital, fostering collaboration,
and navigating the complexities of modern supply chains.” said Mr. Karan
Chechi, Research Director with TechSci Research, a research-based management
consulting firm.
“Supply Chain Finance
Market – Global Industry Size, Share, Trends, Opportunity, and Forecast,
Segmented By Offering (Export and Import Bills, Letter of Credit, Performance
Bonds, Shipping Guarantees, Others), By Provider (Banks, Trade Finance House,
Others), By End User (Large Enterprises, Small and Medium-sized Enterprises),
By Region, By Competition, 2019-2029, has evaluated
the future growth potential of global Supply Chain Finance market and provides
statistics & information on market size, structure and future market
growth. The report intends to provide cutting-edge market intelligence and help
decision makers take sound investment decisions. Besides, the report also
identifies and analyzes the emerging trends along with essential drivers,
challenges, and opportunities in the global Supply Chain Finance market.
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