Supply Chain Finance Solutions
Chapter 6
The Market Size for SCF Solutions
By Wang Di
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Main contents
1.
2.
3.
4.
5.
Company Characteristics
Commercial Relationship Characteristics
Cost–Benefit Analysis of SCF Solutions
Application of the SCF Model
Summary of Results
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Product and industry categories based on
SITC(Standard International Trade Classification)
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highest benefits were assigned to retail, manufacturing,
electronics, food and beverage and pharmaceutical
companies
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Commercial Relationship
Characteristics
1. Supply Chain Design
2. Supply Chain Risks
3. Supply Chain Transaction Characteristics
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Supply Chain Design
constraints :
A bilateral monopoly or restrictive monopsony（ only
one supplier and one buyer）
low level of complexity
No Networks
lower benefit opportunities.
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Supply Chain Risks
economic risks
political risks
financial risks
the possibility that
the probability of
deterioration in the cargo is damaged
exchange rate.
insurance
a constraint
towards SCF
solutions.
reduce currency
risks via various
hedging techniques
Not fulfill its
obligations.
Exporter:
1.Production risks
2.Risks of nonacceptance
3.Default
Importer:
1.Procurement risks
2. Insolvency risks
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Supply Chain Transaction
Characteristics
Geographic
Scope
• Cross-border domestic
trade
• OECD non-OECD trade.
Frequency • 120 annually is minimum
of
• assumed 75% fulfills the
frequency criterion
Transactions
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Cost–Benefit Analysis of SCF
Solutions
Assumptions:
• The calculated market potential implies that each company
either acts as an importer or exporter, thereby excluding the
likely case that a company represents both
• excluding the possibility of prepayments
• does not consider intra-OECD and intra-non-OECD trade
• does not consider distinctions in the motif and benefit
distribution of the different SCF solutions. Experience
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Determination of the Relevant
Parameters
average
DPO
invoice value WACC
DSO
WACC
eliminated
insolvency
risk,
dilution rate
savings in
loss
deduction
Servicing fee
funding and
the risk fee
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Administrative Costs
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Parameters Specific to the Importer
(Focal Company)
the average DPO in all major industries was 50 days
51.6 and 48.5 days
SCF leading to a DPO extension of 20 days.
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WACC(Weighted Average Cost of
Capital)
Defination : A calculation of a firm's cost of capital in which each
category of capital is proportionately weighted. All capital
sources - common stock, preferred stock, bonds and any other
long-term debt are included in a WACC calculation.
•
•
•
•
•
•
•
•
ke = cost of equity
kd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V=E+D
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
T = tax rate
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we can see how much interest the company has
to pay for every dollar it finances.
WACC代表公司整体平均资金成本，可用来衡量一个项目是否值得投资；项目的
回报必须不低于WACC。 计算WACC时，先算出构成公司资本结构的各个项目如普
通股、优先股、公司债及其他长期负债各自的资金成本或要求回报率，然后将这
些回报率按各项目在资本结构中的权重加权，即可算出加权平均资本成本。
• 加权平均资本成本（WACC），反映一个公司通过股权和债务融
资的平均成本，项目融资的收益率必须高于这个加权平均资本
成本该项目才具有投资价值。
•
计算公式=（债务/总资本）*债务成本*（1-企业所得税税
率）+（资产净值/总资本）*股权成本
•
其中，债务成本和股权成本用债务人和股东要求的收益率
表示。至于债务成本一项要乘以（1-企业所得税税率），是因
为与股权融资相比，债务融资可以使企业少缴企业所得税，因
为利息在计算利润时是被扣除掉的，而所得税的计算又是按照
利润总额的一定比例计算的，显然被扣除利息后的利润乘以一
定比率所计算的所得税要比不扣除的计算的少，基于此，所以
说利息能够抵税。
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Parameters Specific to the Exporter
(Focal Company)
DSO average 59 days
SCF can reduce 39 days & reduce lost ratio from
0.3% to 0.1%
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Parameters Set Externally
Funder
• An average funding spread of 3% in
this research
Risk taker
• realistic risk fee is 0.2% annually
Service
provider
• around 0.3% of the transaction
volume
Non-OECD
• their WACC is estimated to be
supplier/buyer 15%
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Cost–Benefit Analysis to the
Importer
An importing focal company generates potential
savings by implementing an SCF solution if its
non-OECD purchase volume is greater than
$3,373,984.Additional purchases yield savings
of $0.0089 per US dollar
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Cost–Benefit Analysis to the
Exporter
An exporting focal company generates potential
savings by implementing an SCF solution if its nonOECD turnover volume is greater than
$1,904,937.Additional turnover yields savings of
$0.016 per US dollar.
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Estimation of Relevant Trade Flows
• As can be inferred from Table 6.10, the constraints overall
reduce the SCF
application potential from $2,770,260 million to $702,843
million, which accounts for approximately 25%. Table 6.11
displays the OECD exports.
• The SCF potential from non-OECD directed imports is
estimated at
$702,843 million. The potential for directed exports is
estimated at $547,049million.
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Models
Benefits to Suppliers in the SCF Importer Model
Benefits to Buyers in the SCF Exporter Model
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overviews
21
overviews
22
overviews
23
overviews
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Summary of Results
• The potential market size for SCF solutions for non-OECD directed imports is
estimated to be $702,843 million.
• The potential market size for SCF solutions for non-OECD directed exports is
estimated to be $547,049 million.
• An importing focal company generates potential savings by implementing
an
SCF solution if its non-OECD purchase volume is estimated to be greater than
$3,373,984.
• An exporting focal company generates potential savings by implementing an
SCF solution if its non-OECD turnover volume is estimated to be greater than
$1,904,937.
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The end
Thank you!
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