Mackinac Bridge in Michigan
Latest News
Post-mortem analysis on Greensill and other cases
FCI AM 21 - Panel on Post-mortem analysis on Greensill and other cases

Recent scandals due to companies using the buzz phrase ‘Supply Chain Finance’ as a cover for other types of financing have brought about lots of discussions around legitimacy and transparency. With the example of Greensill, the supply chain industry came under the microscope to find out what happened.

Through a rigorous investigation, it came out that companies were running unsecured lending programmes but dressing them up to look like some high tech, new age looking supply chain finance technique. This wizard cover led many high profile banks and lenders to support this programme and invest heavily.

In lamens terms, supply chain finance is a type of cash advance for an agreed contract between buyer and seller, based on the credit rating of the companies. The buyer and seller agree to a contract, the buyer informs the lender, the lender pays the supplier (Minus a small fee), the buyer pays the lender on the payment due date. The issue with Greensill was that they were financing without any contracts, with the notion that the client will get a contract in the future.

At our Annual Meeting back in September, we featured a session around analysing the Greensill saga and others that have been caught misleading investors. Moderator Deepesh Patel (TFG) along with panellists Sean Edwards (ITFA), Igor Zaks (Tenzor) and Thomas Dunn (Orbian) examined the risk factors, the role of credit insurance and the challenges relating to arm’s length funds all while examining what went on and how did this go on for so long. We have extracted the session from the recordings so you can watch the full discussion.

Watch the discussion here.