Former Pepsi and Apple boss moves into €18 trillion receivables finance challenge
It is well known that there are vast sums of money tied up in unpaid trade invoices. Releasing these funds has met with some success in recent years through factoring and securitisation programmes. However, still less than 20% of UK receivables are funded today. This means the potential for supplying further receivables funding could be as high as €3 trillion. And this is just the UK. If you extend this to the rest of Europe the figure rises to an estimated €18 trillion. The problem has been in finding an efficient way of releasing these funds so that businesses can put them to better use.
One way of doing this is to ensure that both suppliers and purchasers in the supply chain both benefit. In terms of the suppliers, who are often cash starved SMEs, the benefits of releasing working capital tied up in receivables are obvious. But if you can also make it very advantageous to the purchaser, by streamlining their accounts payable departments, enabling extended payment terms and providing bulk purchase discounts at the same time, then a potentially vast new stream of business is opened up.
One specialist financier operating in this field is SCF Capital, a London based boutique merchant bank, who are initially targeting the electronics and print industries. The Bank’s New York partner is ex Pepsi president and ex Apple CEO, John Sculley. Sculley, who was made famous by his development of the ‘Pepsi Challenge’ in the 70s and has been involved in several successful businesses since, believes that ‘opportunity for game changing innovation in global supply chain finance is bigger than anything I've seen, including my days with Pepsi and Apple'.
SCF plans to partner with Europe's leading factoring banks in order to link into European supply chain finance programs that can then and take advantage of the lower cost financing made available through SCF Capital's programs. As a boutique merchant bank servicing corporates Sculley’s goal is to ‘partner as a "game changing enabler" with banks, private equity firms, and hedge funds’.
Mr. Sculley’s enthusiasm is shared by Michael Bickers, Editor of the World Factoring Yearbook. According to Bickers, ‘the receivables finance and factoring industry has been growing rapidly in the UK and globally for the last twenty years and is still considered to have huge potential. If John Sculley is right it could have an enormous implications for trade finance and the supply chain in general.
John Sculley will be speaking at Receivables Finance International, Vienna, 20-21 March. For further information contact BCR Publishing, www.bcrpub.co.uk, e-mail firstname.lastname@example.org
figures compiled using data from Eurostat, FCI and S & P
**World Factoring Yearbook is published by BCR Publishing Ltd.