Supply Chain and an Overview of Its Banking Financing Methods

Extensive economic, production and commercial transformations in recent decades have led to considerable changes regarding the presence and participation of businesses in national and international supply chains. Simultaneously, with the development of supply chains and the evolution of business models of economic enterprises, it is very important to examine the dimensions and financing mechanism of supply chains. This new configuration of the production structure has shown its effects in the formation of new financing models of banks and financial institutions, which in turn oversees the evolution of new dimensions of relations between banks and economic enterprises. In this study, the conventional methods of financing supply chains by banks of other countries and the possibility of implementing them in Iranian banks according to the existing financing tools have been investigated. In this regard, there is a relatively wide range of financing services, including factoring, reverse factoring, letters of credit, purchase order financing etc, which banks can use to satisfy the financing needs of supply chains. The results of the present research show that by understanding the evolving nature of supply chains and revising the policy-making and internal management approaches, it is possible to implement various supply chain financing methods such as domestic letters of credit, debt purchase contract, Istisna'a contract, productive credit certificate and assignment of contractual claims (factoring) for economic enterprises of the country. Of course, in this regard, it is necessary to take into account the risk of using the mentioned tools and their negative effects on the banks' balance sheets.