Financial Supply Chain Management- Elements and other Details

Industries all over the world have been taking those extra steps to take their products and services to customers. Manufacturers like to term this as a supply chain, a term that encompasses different processes, people, and more, involving the transfer of goods and services from the manufacturer to the customer. 

In a similar manner, trade service has to take care of a supply chain that’s entirely devoted to the financial nature of transactions.

This is what financial supply chain management entails. 

Financial supply chain management- What is it?

Financial supply chain management or FSCM refers to the process of analyzing financial processes taking place in a comprehensive manner and not looking at them as individual processes. The financial supply chain management process entails steps like working capital management, procure-to-pay cycles, and order-to-cash cycle business. 

The goal of financial supply chain management is to ensure achievement and take care of the visibility into the processes mentioned above so that every supply chain can be as efficient as possible and then also make use of this efficiency to keep costs in check. 

 Elements in a Financial Supply Chain

There are three major elements in a financial supply chain. Other than these elements, this supply chain also takes the needs and requirements of teams and departments into account, while the focus still remains on how financial information flows within the prescribed steps in the process. 

Here are the elements involved in the financial supply chain- 

• The Procure-to-Pay Cycle

This process is considered from the perspective of a company that will be making the purchase of goods and services being offered. During this cycle, the said company chooses, receives, and even makes a payment for the items needed for the production of goods and services being delivered to customers. 

• The Order-to-Cash Cycle

The order-to-cash cycle is very similar to the P2P cycle mentioned above, with the difference that this one is from the viewpoint of that company that will be supplying the goods, raw materials, or services, for that matter.

The process begins when a quote is provided to the customer by a supplier after the former has made the payment and also delivered the invoice that has been agreed upon. If we talk about the financial nature of the same, the account receivable covers a crucial part of this process. 

Once the invoice has been issued in the process, it then becomes the responsibility of the finance team to ensure that the payment gets collected in the most efficient manner possible. 

• Management of Working Capital

While the area of finance is surely a complex one with lots of challenges, it can’t be denied that finance is also the most crucial part of an organization. Managing these finances in the right manner is crucial as it will be the efficiency here that will ensure smooth transactions and subsequent processes that take care of achieving business objectives and growth. 

As a process, working capital management refers to the process where a company tries to bring balance among the assets and liabilities to ensure the right kind of efficiency, meeting the needs of optimal cash flow to take care of both- the long-term as well as short-term goals and obligations in the process. 

How does Trade Technologies Present Itself 

With years in the business and more than 1500 clients over the globe, Trade Technologies offers trade finance solutions that offer to simplify your financial supply chain management by taking into account, the different parties involved within the same- importers, exporters, banks, and logistics.

Not just trade finance solutions, the brand also offers a highly sophisticated global trade management system, which streamlines aspects like document management and their customization to suit your needs. 

As a business involved in international trade, you can get in touch with an experienced and professional team for all your requirements.