Editor's Note: This article comes fromBlockchain Camp (ID: blockchain_camp), Author: Pang Yuxiong, reproduced by Odaily with authorization.
Editor's Note: This article comes from
Blockchain Camp (ID: blockchain_camp)
, Author: Pang Yuxiong, reproduced by Odaily with authorization.
Since its birth, supply chain finance has been sought after by market players with its unique model, and has developed very rapidly. However, due to limitations of other factors, it has not been able to effectively realize its potential.
Specifically, the bank's credit objects are relatively limited, the core enterprise's technological support is insufficient, and the transaction process cannot be visualized. These have become bottlenecks in the development of supply chain finance, and blockchain technology uses distributed accounting and storage, and has the characteristics of not easy to tamper with information, decentralization and openness, which is exactly the solution to the development of supply chain finance. Therefore, it is very meaningful to explore the application of blockchain technology in supply chain finance.
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Supply Chain Financial Model Analysis
Supply chain finance, simply put, is a financing model in which banks connect core enterprises with upstream and downstream enterprises and provide flexible financial products and services. That is, capital is used as a solvent in the supply chain to increase its liquidity.
Generally speaking, the supply chain of a specific commodity is from the procurement of raw materials to the manufacture of intermediate and final products, and finally the sales network delivers the products to consumers, connecting suppliers, manufacturers, distributors, retailers, and end users. connected into a whole. In this supply chain, due to their strong position, the core enterprises with strong competitiveness and large scale often have strict requirements on the upstream and downstream supporting enterprises in terms of delivery, price, account period and other trade terms, which has caused huge losses to these enterprises. pressure. Most of the upstream and downstream supporting enterprises are small and medium-sized enterprises, and it is difficult to obtain financing from banks. In the end, the capital chain may be very tense, and the entire supply chain may become unbalanced.
The biggest feature of "supply chain finance" is to find a large core enterprise in the supply chain and provide financial support for the supply chain with the core enterprise as the starting point. On the one hand, it effectively injects funds into relatively disadvantaged upstream and downstream supporting small and medium-sized enterprises to solve the problems of financing difficulties and supply chain imbalances for small and medium-sized enterprises; Small and medium-sized enterprises establish long-term strategic synergies with core enterprises to enhance the competitiveness of the supply chain.
1. The concept of supply chain finance
Supply chain finance is generated on the basis of supply chain management by enterprises. Traditional supply chain management only focuses on information flow and logistics, ignoring the management of capital flow, so that core enterprises with high reputation and easy access to bank loans and supply chain Small and medium-sized enterprises with poor credit and financing difficulties in China have serious liquidity imbalance problems, and because core enterprises usually use their strong positions to occupy a certain amount of working capital, the income and expenditure of funds for small and medium-sized enterprises cannot occur at the same time, resulting in Funding gap. Supply chain finance is to use the credit guarantee of core enterprises through the intervention of commercial banks to introduce low-cost capital flow to small and medium-sized enterprises in the upstream and downstream of the supply chain to solve their funding gap and maintain the efficient operation of funds in the entire supply chain.
The original intention of the supply chain financial model is to solve the financial difficulties of supply chain node enterprises, especially small and medium-sized enterprises. Small and medium-sized enterprises are affected by their own limitations and the particularity of the financial industry, and the problem of capital flow has always been a key factor affecting their operations. SMEs generally have strong financing needs.
Supply chain finance is to fully spread financial services throughout the supply chain. Based on the trust of the core enterprises in the supply chain, banks provide upstream suppliers with accounts receivable financing, downstream distributors with accounts payable financing services, and other services. related financial services. The credit granted to upstream and downstream enterprises in the supply chain is achieved through the strong credit conditions and strong information integration capabilities of core enterprises. Developing financial services along the entire supply chain is an important direction for commercial banking and product innovation.
In essence, supply chain finance is more inclusive and open to small and medium-sized enterprises, and it provides a good idea for solving the financing problems of small and medium-sized enterprises. Supply chain finance has been favored by all parties since it was proposed. From the perspective of risk control, it takes core enterprises and supporting upstream and downstream enterprises as a whole, and transforms uncontrollable risks of individual enterprises into overall controllable risks. Through this The innovation of risk control methods not only increases the business scale of commercial banks, but also solves the liquidity needs of small and medium-sized enterprises, and fulfills the purpose of financial services for the real economy.
However, the credit granting model of supply chain finance is different from that of traditional banks. The former adopts overall credit granting, while the latter adopts individual credit granting. The innovation of this credit granting model is the charm of supply chain finance. Supply chain finance is more conducive to the financing of small and medium-sized enterprises. Commercial banks no longer have excessive requirements for financial static data such as fixed assets and collateral mortgages of small and medium-sized enterprises, but to assess the credit level and solvency of core enterprises in the supply chain. The trust in the products, credit and information technology level of core enterprises, and then more credit loans to SMEs, will undoubtedly reduce the problem of information asymmetry between SMEs and banks, and also facilitate banks to better understand SMEs true financial situation.
Commercial banks have gone through a long period of exploration, and the supply chain financial business has also made great progress. In particular, modern high-tech information technology provides a reliable means for the management process, and the enterprise's own resource management and communication between enterprises are also Increasingly, tools mediated by ERP systems are used. Now almost all listed companies have their own ERP system to improve the management efficiency of logistics, business flow and capital flow, and improve the information level of enterprises.
2. Demand analysis of enterprise supply chain finance
The fundamental purpose of supply chain management is to realize the effective transmission and connection of capital flow, information flow, logistics and business flow, among which the coordination of capital flow is the key to ensure the continuous and healthy operation of the supply chain. However, the supply chain management model may make the business process Increased financial costs incurred.
First, due to the fact that many production processes are constantly changing due to the influence of the market, from the procurement of raw materials to the production of products and then to the consumer end, the transaction frequency between enterprises is high. In order to meet the needs of market transactions, enterprises on the chain must ensure sufficient cash, thus increase the cost of capital;
The second is that credit sales are a major transaction method in the supply chain management model. Credit sales transfer the pressure of capital demand among enterprises on the chain, and are often passed on to small and medium-sized enterprises in a weak position. The capital flow gap and financing needs of supply chain node enterprises in the operation process are shown in the figure below.
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Supply chain financing operation flow chart
1) Analysis of demand points of upstream enterprises in the supply chain
The financing needs of supply chain node enterprises often come from the fund gap in the procurement, operation and sales stages. There is a funding gap for small and medium buyers.
The way of credit sales puts more and more financial pressure on small and medium-sized enterprises in the upstream of the supply chain. The extension of the period of credit sales brings liquidity pressure to upstream companies in the supply chain. Upstream companies in the supply chain need convenient sources of funds to ensure normal operation.
2) Analysis of demand points of midstream enterprises in the supply chain
In the process of operation, enterprises will be affected by factors such as unbalanced supply and demand and fluctuations in commodity prices. In order to ensure the stability of commodity sales and respond to market changes, companies often accumulate a certain amount of inventory, which increases the capital occupation cost of the supply chain. Relevant studies show that it accounts for more than 30%. Therefore, enterprises with slow capital turnover, especially small and medium-sized enterprises, not only need to maintain a certain amount of inventory, but also hope to revitalize the inventory and turn it into working capital to meet business operations. For these enterprises that have financing needs in the course of operation, the transaction cost of obtaining credit by themselves is relatively high, and obtaining credit by using the relationship with other enterprises in the supply chain can not only reduce costs, but also generate external economies of scale.
3. Analysis of demand points of downstream enterprises in the supply chain
In the sales stage, enterprises in a weak position are often unable to recover the payment in time because of the strength of the purchaser (core enterprise), and the downstream small and medium distributors usually need to pay the payment first before realizing the sales of the product, so there is a payment node to then The fund gap of the sales collection node.
The reason why downstream small and medium-sized enterprises pay advance payments for purchases is because downstream small and medium-sized enterprises are often at a disadvantage in the transaction process; Preferential prices, so that goods can be picked up in batches for sales during the peak sales season, or downstream enterprises can enjoy certain discounts for bulk purchases through one-time payment, while core enterprises cannot deliver goods at one time due to production conditions.
The prepayments paid to core enterprises occupy a large amount of working capital of small and medium-sized enterprises. In order to ensure the normal operation of enterprises, these small and medium-sized enterprises also need external financing.
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Application of blockchain in supply chain finance
The goal of the development of supply chain finance is to rely on the core enterprises of the supply chain to provide comprehensive financial services for upstream and downstream related enterprises in the industry, and ultimately reduce the operating costs of the entire supply chain, and to build banks, enterprises and supply chains through the cooperation of financial capital and the real economy. An industrial ecology of mutually beneficial coexistence and sustainable development. Financing convenience and low cost are the internal driving forces for the prosperity of the industrial ecology. At present, supply chain finance is still in its infancy in China, and there are many problems such as isolated islands of information, inability to effectively transfer the trust of core enterprises, difficulty in financing, and expensive financing.
The blockchain has the potential for innovative breakthroughs in terms of financing convenience and financing costs due to its technical characteristics such as data being difficult to tamper with and data traceability. The characteristics of blockchain technology have a natural match with the characteristics of supply chain finance.
1. Problems encountered in the practice of supply chain finance
In recent years, with the development of supply-side reform and industrial transformation, many enterprises, especially small and medium-sized enterprises, have become increasingly difficult and expensive to obtain financing. In the face of this situation, in order to promote the development of the financial industry, enhance the ability to serve small and medium-sized enterprises, and support the orderly and sound development of the industry, relevant state departments have formulated a series of policies to encourage the rapid and healthy development of the supply chain financial industry. However, in the process of actual business promotion and development, there are still many problems in the development of traditional supply chain financial business. Domestic financial institutions, including banks, started relatively late in developing supply chain financial business compared with foreign counterparts. The special domestic business environment And the new requirements of the ever-changing era make it face more challenges in application.
1) Information blind spots in the supply chain
In actual business operations, the information systems of upstream and downstream enterprises in the same supply chain are independent. Suppliers only supply to manufacturers, and the quality meets the corresponding standards according to the specified requirements. Suppliers or distributors are not willing to open their internal systems to manufacturers, unless they encounter very strong core enterprises, and suppliers or distributors It must rely on the core enterprise to survive, and 95% of enterprises provide at most the corresponding product information or system fields.
The systems between enterprises are not interoperable, resulting in the fragmentation of information between enterprises, making it difficult to effectively use the entire chain of information. For conservative financial institutions such as banks, it is necessary to ensure the safety of funds as much as possible. The opaque information of enterprises means that risk control is more difficult. Enterprise credit, allowing core enterprises to provide guarantees as a prerequisite for lending to their suppliers or distributors.
2) The number of credit enterprises is limited
Supply chain finance revolves around SMEs at both ends of the supply chain of core enterprises, with limited coverage. Many SMEs are still unable to obtain effective financing because they are not at both ends of the core enterprise, and bank credit is only for the first-level distribution of core enterprises. Suppliers and suppliers, second-tier suppliers and distributors cannot obtain financing.
That is to say, the credit of the core enterprise cannot be transferred. As a result of this isolated information island, the indirect trade information between the core enterprise and the upstream supplier cannot be proved, and the ability of the traditional supply chain financial system to transfer the credit of the core enterprise is limited.
The entry threshold for bank acceptance bills is relatively high. If you think of a bank to issue an acceptance bill, you must first obtain a credit from the bank. The threshold for bank credit is basically the same as the application conditions for loans, which means that enterprises must be qualified to borrow from banks. Only when the payment is received can the credit line be obtained from the bank.
However, due to the low level of trust in commercial acceptance bills, the credit of core enterprises can only be transmitted to the first-tier supplier level, and cannot be transmitted across levels in the entire supply chain.
3) The authenticity of the information cannot be discerned
The information system of the core enterprise cannot fully integrate all the transaction information of upstream and downstream enterprises, but only grasps the information of transactions with itself. In this way, the information obtained by the bank is limited, and it is impossible to obtain more information, and it is impossible to identify the source of the information. Authenticity, it is impossible to identify whether the core enterprise conspires with upstream and downstream enterprises to make fraudulent transactions or fraudulently obtain loans.
The cost of core enterprises controlling the supply chain increases sharply with the expansion of the scope of management. With the improvement of industrial division of labor, the number of supply chain enterprises has exploded. In this case, it is unrealistic for core enterprises to fully manage . In the traditional supply chain management mode, core enterprises usually delegate management power to lower-level suppliers. This layered management leads to information asymmetry between upstream and downstream. Core enterprises have insufficient control over logistics, capital flows, and trade flows. There is even a risk of information tampering.
Information asymmetry can lead to two major problems:
The authenticity of the information is doubtful, and financial institutions cannot correctly evaluate asset logistics information and define risk levels, so they are unwilling to lend;
It may lead to a crisis of trust among enterprises and between banks and enterprises. The lack of trust between upstream and downstream enterprises in the supply chain will increase direct costs and time costs such as logistics and capital flow review; banks' distrust of enterprises will also increase the cost of credit evaluation, resulting in lengthy and inefficient financing processes.
4) The transaction process is opaque and the false cost is low
Although supply chain finance integrates logistics, business flow, and information flow, because the entire transaction process is not disclosed in a timely manner, banks only obtain transaction information after the fact, and cannot check the entire transaction process in time. This lag effect will also restrict supply. The development of chain finance.
The original intention of the supply chain financing model is to direct funds to real and efficient trade, and large enterprises at the central position assume the responsibility of increasing credit for related transaction activities.
The limitation of current supply chain management technology makes the transparency and circulation speed of information not optimistic. In addition, some key technologies and channels may be controlled by upstream and downstream enterprises, and core enterprises cannot actually provide sufficient guarantee for the authenticity of their transactions.
Loopholes such as chaotic information management and delivery delays in the supply chain also give companies a chance to collude with each other and practice fraud. Once a problem occurs, it is difficult to prove and pursue responsibility. Once the impact of low-quality or even false transactions is passed on to end consumers, it will have a direct negative impact on the recovery of cash flow. In order to reduce the risk of repayment, banks are forced to increase investment to verify the authenticity of transactions.
The above problems have restricted the further development of supply chain financial services to a large extent, and people urgently need a new technology to solve these problems. In this context, blockchain technology emerged as the times require.
2. Blockchain solutions to supply chain financial problems
1) Realize information sharing between upstream and downstream enterprises
There are many isolated islands of information in the supply chain, and the lack of intercommunication of information between enterprises restricts the verification of a lot of financing information. For example, the supply chain management system, enterprise resource management system, and financial system used by multiple entities have different manufacturers and system versions, which makes it difficult to connect the systems. Information is difficult to share.
By using blockchain technology to solve the problem of isolated islands of information, multiple stakeholders can set rules in advance to realize data intercommunication and information sharing. The core of the blockchain is a distributed accounting database, which gives participants equal rights to information, and any party has the right to view all information but cannot modify or delete it. Features such as decentralization, transparent visualization, non-tampering and traceability make blockchain an effective technical means to support the transformation and upgrading of supply chain finance.
In traditional supply chain management, the production information, commodity information and capital information distributed at each node of the supply chain are separated from each other, unable to flow smoothly along the supply chain, and lack an information platform built around core commodities. The blockchain technology supports multi-party participation, information exchange and sharing, can promote data democratization, integrate fragmented data sources, provide a strong guarantee for big data analysis based on the supply chain, and make big data credit reporting and risk control possible.
The significance of blockchain blessing is not only to speed up the efficiency of information circulation, but also to effectively ensure data quality and protect data privacy. Transparent trade flow, capital flow and information flow are not equal to the complete disclosure of all data. Encryption algorithms can ensure the privacy of each supply chain participant. Other companies disclose supplier information to ensure data objectivity.
The common information platform can solve the problem of supply chain traceability. The information needs of the entire link of production process, logistics transportation and terminal sales can be quickly obtained from the platform, so that the transaction path is clear at a glance, and the connection relationship of each node is more transparent. This can not only speed up the circulation of commodity information and reduce audit costs, but also help traceability, reduce the risk of default, and ensure the smooth progress of financial risk control business.
2) Pass on core corporate credit
According to the Property Law, Electronic Contract Law and Electronic Signature Law, etc., the accounts receivable certificate of the core enterprise is a transferable and financing confirmation certificate on the blockchain, so that the credit of the core enterprise can be transmitted along the credible trade chain path. Based on mutual confirmation of rights, the entire certificate can be derived from various operations such as splitting and traceability.
The decentralization and non-tampering characteristics of the blockchain solve the authenticity of transaction data information on the supply chain chain. In actual operation, core enterprises often introduce ERP system as their own financial information management system. Although the data in ERP system is not easy to change, commercial banks are still worried that core enterprises and suppliers or dealers may collude with each other in private and tamper with transaction data information. possibility.
The blockchain technology has the characteristics of consistency, not easy to change, and decentralization, and the data on the blockchain has the characteristics of time stamps and non-repeated records. Even if the transaction data of a certain node can be tampered with, it will remain It is easy to be found, which solves the bank's concerns about information tampering.
3) Rich and credible trading scenarios
Banks need credible trade scenarios. Since small and medium-sized enterprises cannot verify the existence of trade relations, it is difficult to obtain bank funds under the existing bank risk control system. Likewise, the banking industry cannot penetrate the supply chain to acquire customers and lend money. Blockchain technology can provide trusted trade data.
For example, under the blockchain framework, provide online basic contracts, documents, payment and other structured and complete records, improve information transparency, and realize penetrable supervision. The use of blockchain technology can ensure the authenticity and integrity of the data source in the review stage, which is convenient for checking whether the transaction behind it is actually carried out, and ensures the reliability of the circulation certificate. In the post-loan risk control stage, continuously updated data streams provide support for follow-up tracking of corporate operations, making fictitious transactions and repeated financing invisible. Blockchain applications can give supply chain finance a higher level of security, eliminate financial institutions' concerns about corporate information flow, and solve the problem of small and medium-sized enterprises' inability to self-certify their credit levels to a certain extent, and make the information flow of upstream and downstream enterprises , capital flow and trade flow data are integrated on the chain.
The blockchain supply chain model is shown in the figure below. The mechanism of blockchain data missing self-inspection, multi-party cross-validation, and closed-loop monitoring of funds ensures the authenticity of transactions and can effectively reduce the risk of fraud.
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Blockchain supply chain model diagram (Source: Hande Financial Technology Research Institute)
4) Controlling performance risks
Contract performance cannot be completed automatically, and many agreed settlements cannot be completed automatically, especially when multi-level supplier settlement is involved, there will be more uncertainties. Blockchain technology can realize smart liquidation of contracts.
Automatic liquidation based on smart contracts can reduce manual intervention, reduce operational risks, and ensure the safety of payment. However, there are still many human subjective factors, such as the head of the power department of the core enterprise making illegal demands on suppliers, etc. Although technology can solve many problems, social supervision is still needed to achieve a relatively fair business environment.
Smart contracts are regarded as the most valuable and most popular development direction of blockchain in business scenarios. It encapsulates a number of states and preset rules, triggering execution conditions, and response plans for specific situations, stored in the blockchain contract layer in the form of code, and automatically triggers preset operations when the agreed conditions are met.
The form of intelligent contract performance that only relies on real business data not only ensures the smooth execution of the contract in an environment lacking third-party supervision, but also eliminates the possibility of artificial false operations. In the condition confirmation stage, based on the real-time updated price and quality information on the blockchain, after checking the business information flow of external parties and judging that the transaction is concluded, the smart contract is activated and executed.
At the same time, the pledge is tracked through the Internet of Things, price dynamics are monitored and different automatic response schemes are set up to control market risks. In the subsequent stage of contract execution, decentralized public ledger and multi-signature technology can also be used to strengthen capital flow management and payment collection monitoring.
5) Realize financing cost reduction and increase
