The British Prime Minister David Cameron is supporting a new supply chain finance scheme designed to deliver up to £20 billion in low-cost financing to small businesses.
How does David Cameron know it will be low-cost? In fact what does he know about the subject at all? (Probably enough to be Governor of the Bank of England, judging by who else is on PaddyPower's list).
These schemes rely on banks pricing the loan to the "little firm" at the "big firm" rate whilst not plotting the Contingent Liability as Guarantor credit exposure onto the "big firm": otherwise it blocks the "big firm's" lines.
And what does an invoice approval signify? It doesn't mean the "big firm" has the money to pay, and nor does it convert the invoice into a liquidated debt: it remains unliquidated and subject to the lengthy process to get a County Court Order, winding-up
This looks like another still-born industry initiative. I'm hearing Orbian, ePayments+, EBA STEP3 and other skeletons rattling in the cupboard. On the other hand it would work if the debt was evidenced on a Bill of Exchange which in turn could be re-discounted
at the Bank of England - oh no sorry we scrapped that scheme - the Eligible Bill Discount Facility. So this must be more a re-spray of eLeanor coming out just in time for SIBOS (no sorry that's called BPO, isn't it?)
© Finextra Research 2013