A long time ago, in an office in the City of London, some of the most powerful bankers in the UK put their weight behind a system that could provide the lubrication upon which an economic revival might be stimulated.
By commissioning the Association of Corporate Treasurers to report on the potential of supply chain finance (SCF) to provide additional finance to credit-starved smaller businesses, the Bank of England had issued a statement of intent. Unfortunately, the report was well meaning, but underwhelming, and took the best part of a year to see the light of day.
That was in July 2010, after which all went quiet.
Until, that is, December 2011, when another professional body was asked to, well, report on the potential of supply chain finance to provide additional finance to credit-starved smaller businesses...
We are just about to enter the second quarter of 2012 - around the time three years ago that the Bank of England first discussed the idea of looking into supply chain finance as a good opportunity. In those three years, thousands of businesses have failed - some of which would have been saved if a SCF system was in place. Others would have grown much quicker, given access to the capital that SCF can help provide
Last week, that second report has been published - a report produced by the so-called Breedon Review, led by Tim Breedon, CEO of Legal & General, and supported by the Institute of Chartered Accountants in England and Wales. So, what has it recommended?
In respect to SCF, that government should:
- Explore how it can encourage its suppliers to adopt supply chain finance to support their suppliers.
- Work with banks, industry associations and professional bodies to accelerate adoption of supply chain finance.
Too little, too late.