FINANCING SUPPLY CHAIN

The supply chain finance uses traditional forms of trade finance, such as financing under letters of credit, factoring and forfaiting. In recent decades there has been a significant development of trade within supply chains, and thus shifts the terms of payment from documentary credits and collections towards open accounts. In last decades Banks tried to find a product providing benefits of letter of credit and open account. The result is a new bank product so called Bank Payment Obligation (BPO), which enables to banks to offer flexible risk mitigation and financing services across the supply chain to their corporate customers. The purpose of the paper is to present this new product and highlight its benefits for supply chains finance.