Supply Chain Financing Market

Supply Chain Financing Market Analysis (2023 - 2030)

The global supply chain financing market size is projected to reach USD 6 trillion by 2027. This market is witnessing a healthy CAGR of 18% from 2022 to 2027.

To manage the money invested in the supply chain and lower risk for the parties involved, financial institutions and banks utilize strategies and methodologies known as supply chain financing. This is a crucial component of supply chain management. A popular definition of supply chain financing is an arrangement whereby the buyer consents to accept invoices from his suppliers in exchange for money from banks and other financial institutions. Supply chain financing links buyers and sellers with financing institutions. It is a collection of services accessible to large and medium-sized corporations to reduce financing costs and boost productivity. Purchasing order financing, loans, factoring, and invoice discounting are a few examples. To encourage import and export operations throughout the world, supply chain finance makes sales activities more convenient and company transactions more secure. It helps businesses to obtain imported items while operating on a limited budget and reduces the cost associated with buying bulk commodities throughout the world. Traditional trade financing has been used for a long time to fund international commerce. Based on importers' and exporters' desire for open account commerce, a steady global trend away from these well-known processes has been documented over the previous few years. The emerging markets, who think documenting credit-based trading demonstrates a lack of faith in these markets and their institutions, have contributed to the transition. The usage of supply chain financing has exploded because of the ecology of open account trading and a vast, intricate network of suppliers. According to a McKinsey analysis on supply chain finance, the fastest-growing sector of the USD 7 trillion global trade finance industry is buyer-led supply chain financing, which is estimated to increase 20–24% by 2024. Due to suppliers' constant desire for better cash flow management, supply chain finance has grown significantly over the past ten years and is estimated to continue to do so. Future supply chain financing development is estimated to heavily rely on FinTech and Blockchain technologies.

Key Market Insights:

• The Export and Import Bills, Performance Bonds, Letters of Credit, Shipping Guarantees, and other categories make up the Supply Chain Financing Market. By 2027, it is anticipated that the letter of credit industry would be worth USD 5 billion. The demand for this market segment is primarily being driven by reasons such as a growth in company operations, a rise in demand for customized trade financing solutions, international commerce between SMEs and Large Enterprises, and tight rules for the secured letter of credit confirmation.
• The Supply Chain Financing Market is divided into Banks, Credit Unions, and Other Financial Institutions based on the type of provider. Due to expanded partnerships with small and medium-sized businesses in developing economies, financial institutions are predicted to have significant growth throughout the projected period. The intermediary that evaluates the eligibility of the seller and its debtors is the financing institution. Additionally examined are creditworthiness and the duration of the business partnership. The creation of a secondary market for supply chain finance solutions and attempts to facilitate the financing process, such as standard API integration and data exchange protocols, must be encouraged by banks.

     The Supply Chain Financing Market is divided into Small and Medium-Sized Enterprises and Large Enterprises based on End-User. Over the projection period, it is projected that the Large Enterprises sector would maintain its lead in market share. Major-scale commerce between many sectors, including electricity and utilities, healthcare, technology, and others, has boosted the use of letters of credit confirmation, which has pushed large businesses to use supply chain finance. Assessing credit risk for SMEs is often more difficult than for bigger companies.

• Geographically, the global supply chain financing market is now dominated by North America, and this region is predicted to experience rapid growth over the coming years. The integration of blockchain technology into the supply chain as well as funding from the U.S. export agency, which is used to strengthen export opportunities through extensive project planning and the creation of sustainable infrastructure for local economic development, are the main drivers of this growth. During the forecast period, it is predicted that the European Supply Chain Financing Market would expand at the quickest rate. This is linked to improved public policy, the engagement of export credit agencies (ECA) in overseas commerce, and the facilitation of global trade.

Market Segmentation

By Offering

• Export and Import Bills
• Performance Bonds
• Letter of Credit
• Shipping Guarantees
• Others

By Provider Type

• Banks
• Credit Unions
• Other Financial Institutions

By End-User

• Small & Medium Enterprises
• Large Enterprises

By Region

• North America
• Europe
• The Asia Pacific
• Latin America
• The Middle East
• Africa

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