Under the conventional model, only the large direct suppliers of Anchor Companies can get funded with their Account Receivables. However, on average direct suppliers represent less than 15% of the supply chain; and it is usually the 85% smaller suppliers that are in most dire need for working capital liquidity. Such supply-demand mismatch often results in long delays in projects that increase not only Anchor’s business risks but also overall transaction costs of the entire supply chain. Leveraging edging financial technologies, Chained Finance now provides a holistic solution to this structural problem.
Chained Finance converts Anchors’ Account Payables to digital assets (eAP) on Blockchain, where all eAP owners can pay others or get funded with their eAP anytime.
Use eAP as payment
After Account Payables are created between Anchor and direct suppliers (L1s), the assets are digitalized and written into L1s’ virtual account on Blockchain. L1s can then split their owned eAP any way they like to pay their suppliers (L2s), so on and so forth until eAP is circulated to facilitate transactions within the entire supply chain.
Finance with eAP
At any time, any eAP owners can choose to get cash with their eAP via Chained Finance, which has partnered with various funding sources to serve all needs.
Lower costs for entire supply chain, thus garnering huge savings for Anchor’s own procurement costs.
Utilize un-financed Account Receivables; convert to eAP to pay suppliers and essentially realize 0-cost financing.
Average financing cost for SME Suppliers is 25%+.The cost will be below 10% if using Anchor eAP to finance.
Traditional Supply Chain Finance
At least 7-10 working days for approval process
High handling charges
Case-by case approval requiring numerous documents
Handled manually with decks forms to fill out
Low data transparency; prone to operational risks
Difficult to trace AP ownership; high risk premium
Real-time transaction; get financed anytime;
get cash as soon as in the same day
Efficient approval process; minimal handling charges
All online; highly automated and convenient
Blockchain stores all transactions
Data traceable and cannot be tampered with
Anchor credit based; low risk premium
Blockchain Technology, also known as Distributed Ledger Technology, is used to construct a network where all participants keep independent records of all transactions within the network. By enabling distributed, rather than centralized, record keeping, Blockchain Technology is regarded as one of the most critical next-generation technologies for the Internet. Combining a series of advanced technologies including cryptography, smart contract, de-centralized deployment, Blockchain ensures all transaction records on Blockchain are traceable and not tampered with, thus saving significant verification, agency and exceptional handling costs. According to Banco Santander research, Blockchain technology is estimated to bring USD15-25 billion dollars savings each year for the banking industry. Combing technology strengths of its China and Silicon Valley teams, Chained Finance is proud to craft China’s first Blockchain Supply Chain Finance platform.
Data stored and distributed via numerous nodes; System unaffected by defects of any single node
Each node in the network can independently verify transaction data
Each node can view all historical transaction data
Concurrently Special Assistant to Honhai (Foxconn) GCFO; Founding Managing Partner of HCM Capital HCM; Founder & Executive Director of FnConn.