The newly formed Global Supply Chain Finance (SCF) Forum seeks to clarify existing definitions and supply chain finance terminology and will be led by the ICC Banking Commission, Euro Banking Association (EBA), Bankers Association for Finance and Trade (BAFT), Factors Chain International (FCI), International Factors Group (IFG) and the International Forfaiting Association (IFA).

Kah Chye Tan, chair of the ICC Banking Commission says: "Given increased collaboration among the wide range of bank and non-bank representatives facilitating domestic and cross border trade, and the advent of Internet and new communication technologies, it is more important than ever before for all market participants to adopt universally-accepted terminology that corresponds to the rich array of processing, financing and risk management techniques currently being developed by the industry to support increasingly globalised supply chains."

Initial objectives of the Global SCF Forum include efforts to explicitly define the typology of SCF products and services developed by stakeholder associations. Other objectives are to harmonise SCF existing market terminology - rendering it operational and usable in daily practice by banks and non-banks when processing, financing and risk mitigating trade transactions - and to future-proof it so as to meet ever-changing market needs.

"Today, the term 'supply chain finance' covers a wide range of products, programmes and solutions in the financing of international trade, to the extent that it can be used to refer to a single product, or a comprehensive programme of solutions aimed at addressing the full range of needs of importers and exporters," says SCF Global Forum Drafting Group Chair Alexander Malaket. "Supply Chain Finance is at times positioned as a complement, a subset or even a superset of global trade finance, and the inconsistency in definitions, nomenclature and general language around the financing of trade linked to open account terms and to the support of global supply chains, is proving to be challenging for importers, exporters, bankers, financiers and other service providers."

To kick-off the initiative, the six associations undertaking the project are to conduct a series of non-binding, open consultations - including where appropriate corporates and end-clients - with the aim of compiling a set of recommended definitions within a twelve-month timeframe.