Today, the Prime Minister announced a ground-breaking agreement with leading UK companies that will help tens of thousands of businesses secure increased levels of affordable finance.
Several UK-based automotive companies took part in the round-table to discuss the important role they play in supporting their supply chains.
Prime Minister David Cameron said, “This Government is determined to back all those businesses who aspire to get ahead and take on more people. In the current climate, viable businesses can struggle to get the finance they need to grow – this scheme will not only help them secure finance and support cash flow, but will help secure supply chains for some of our biggest companies and protect thousands of jobs. It can be a win-win, with large companies and small suppliers both benefiting from this innovative scheme.
Supply Chain Finance (SCF) is an innovative way for large companies to help their supply chain access credit, improve cash-flow and at a much lower cost, and has already been successfully implemented by companies including Rolls Royce and Jaguar Land Rover.
With Supply Chain Finance a bank is notified by a large company that an invoice has been approved for payment; the bank is then able to offer a 100 per cent immediate advance to the supplier at lower interest rates, knowing the invoice will ultimately be paid by the large company.
Taken together, this means that leading companies could deliver up to as much as £20 billion of new cheaper, finance to their suppliers, including many UK SMEs.
Last week, SMMT announced that it will bring together some of the UK’s largest financial lenders and automotive supply companies at a specialist Meet the Funder networking event in November designed to enhance dialogue, strengthen relationships and ramp-up lending in the auto industry.
KPMG recently released a report called ‘Capturing opportunity’ that looks at supply chain opportunities in the UK automotive sector.