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The application advantages of blockchain in supply chain finance and four common models, Golden Finance

Time : 28/10/2021 Author : s8kpdw Click : + -
        Since General Secretary Xi emphasized on accelerating the development of blockchain technology and industrial innovation on October 24, 2019, the application and promotion of blockchain has become a hot topic, especially in the field of supply chain finance. With blockchain technology, can supply chain finance be completely solved? The following is a key analysis of what blockchain technology can do for supply chain finance. On March 31, 2020, Premier Li Keqiang presided over a State Council executive meeting to deploy and strengthen financial support for small, medium-sized and micro enterprises. This is the eighth time in the past two months that the executive meeting of the State Council has targeted "oxygen supply" for a large group of small, medium-sized and micro enterprises and individual industrial and commercial households. At the same time, the meeting decided to expand channels for low-cost financing for private, small, medium-sized and micro enterprises, and encourage the development of supply chain financial products such as orders, warehouse receipts, and accounts receivable financing.
 
        Supply chain financial products have always had major pain points, such as many participation links, long chains, high relevance, and difficult to identify transaction scenarios. How to solve the identification of authenticity risks by financial institutions is the core problem of supply chain finance. As a new technology combination, blockchain integrates P2P networks, consensus algorithms, asymmetric encryption, smart contracts and other new technologies. It is a traceable block chained data structure built through transparent and trusted rules in the environment of peer-to-peer networks (also known as distributed networks, peer-to-peer networks). It has distributed peer-to-peer, chained data blocks, anti forgery and anti tampering, traceability The typical characteristics of transparency, credibility and high reliability, and its technical characteristics have unique advantages in the supply chain finance scenario.
 
        As for the definition of supply chain finance, it is generally believed in China that it refers to comprehensive financial products and services for upstream and downstream enterprises in the supply chain, relying on core customers, taking the real trade background as the premise, using self liquidating trade financing, closing cash flow or controlling logistics through professional means such as accounts receivable pledge registration and third-party supervision. Industry: in consideration of policy risks, industry risks and other aspects, the subdivision business direction of financial institutions should generally follow the requirements of the catalogue of industrial structure adjustment issued by the national development and Reform Commission, actively intervene in encouraged businesses that meet the national policy guidance, and prudently intervene in restricted and eliminated industries; On the other hand, financial institutions are also in a state of prudent operation in industries with strong volatility with the economic cycle, or industries that have had major risk events, such as insurance companies, credit guarantee insurance products, steel trade industry, etc.
 
        Core enterprises: credit risk and authenticity risk are the focus of financing business. Credit risk is the repayment risk of core enterprises. Core enterprises are generally the final payer, guarantor or witness in the financial link of the supply chain, so the requirements for the performance qualification of core enterprises are relatively strict. According to the strength and rating of core enterprises, commercial banks will have different credit rules. Generally speaking, large-scale state-owned core enterprises that can expand the upstream and downstream supply chain financial business on a large scale need to meet the rating qualification requirements above AA. For private core enterprises, the above rating requirements will be relatively higher; For industries in the restricted or eliminated category, commercial banks will generally choose leading enterprises in the industry to operate.
 
        For non bank financial institutions, the decision-making mechanism will be relatively flexible. Due to the high cost of capital, the above rating requirements can be moderately reduced. The focus of authenticity risk consideration is to truly and effectively transfer the credit of core enterprises to other upstream and downstream enterprises. During the risk review, it will focus on the confirmation of the right of core enterprises, which is generally divided into two cases. One case is that the core enterprises directly confirm the right by issuing paper documents with red seals. In actual operation, the core enterprises will encounter the situation that the cooperation degree of core enterprises is low, and the core enterprises will not issue, Or the issuing time is too slow to meet the requirements of supply chain finance business for risk control or efficiency; Another situation is that financial institutions are directly connected with the ERP system of core enterprises to directly transmit the right confirmation information of core enterprises to financial institutions, but this practice has some problems. On the one hand, if the core enterprises open the door to financial institutions based on the ERP system of core enterprises, in the view of financial institutions, there will be a certain moral hazard, and the authenticity of the right confirmation information cannot be effectively confirmed; Once there is repayment risk, the system docking can not leave enough evidence documents to support the processing of post loan links. On the other hand, financial institutions are relatively low willingness to go deep into the industry, and are usually unwilling to develop special systems for data docking.
 
        In this case, it is often solved by building an alliance chain through blockchain. Supply chain: generally, the supply chain needs to have certain scale and stability requirements. Financial institutions need to invest a certain amount of technology development costs and personnel to carry out supply chain financial business. If the scale of the supply chain is too small, it is difficult for financial products to produce a certain scale effect, and the capital income brought by financial products can not cover the cost of product development investment, which will lead to the situation that income cannot make ends meet; If the stability of the supply chain is insufficient, the risk control structure is also difficult to achieve a high-quality breakthrough. The service object of supply chain finance is mainly aimed at some assets with weak liquidity, such as the capital gap caused by the settlement delay of accounts receivable, inventory, prepayment and other subjects, and needs to meet the characteristics of self liquidating trade financing.
 
        At the same time, according to the requirements of the "KYC principle" put forward by the supervision department of financial institutions, financial institutions need to straighten the relationship with financing customers, achieve true and effective identity identification and risk identification, and make preliminary evaluation on customer access with the help of some three-party data information and the credit information of the central bank. In the context of supply chain finance, financing customers need to meet the requirements of cooperation years with core enterprises, such as cooperation time of no less than 1 year. The authenticity risk of transaction links and mortgages and pledges is the focus of consideration at this stage. The main concern of financial institutions is that cargo logistics and capital flow are concentrated on the platform of core enterprises for management. Core enterprises may have certain forgery opportunities due to the consideration of the platform's own interests, which is prone to moral hazard. In order to make full use of the credit enhancement role of goods, third-party supervision is often used in practice, That is, financial institutions will appoint a third party with a certain guarantee ability to supervise the goods, but the third party company will put forward some relevant requirements in consideration of its own interests and risks, such as storing the goods in the designated warehouse, which directly leads to the increase of additional logistics costs, or the need to charge additional transformation fees for the Informatization Transformation of the warehouse, thus greatly increasing the actual operating costs.
 
        In the actual promotion, the promotion mode of third-party supervision has great limitations and has not been carried out on a large scale. The advantages of blockchain, such as decentralization and tamperability, can show the information of contract flow, goods logistics and capital flow in the supply chain transparently throughout the whole process, so as to solve the concerns of financial institutions about moral hazard. As a new technology, blockchain has the technical characteristics of decentralization, distribution and tamper proof. In a stable supply chain financial scenario, it can play the following functions:. Around the information flow, logistics, capital flow and other key links, the information can be visually displayed in a timely manner with the help of blockchain technology, and the authenticity of supply chain data can be highlighted through the transaction verification with paper documents and Internet of things information.
 
        The introduction of blockchain technology can break the traditional waterfall operation process. Some materials required for risk control audit are displayed at the first time through smart contracts, so as to improve the efficiency of the whole audit process. At the same time of credit transmission of core enterprises, it will also reflect the credit enhancement function of small and medium-sized enterprises and goods, and gradually transfer the quota of core enterprises in financial institutions to small and medium-sized enterprises. So as to further release the credit line of financial institutions to core enterprises. For small and scattered assets with a large number, the performance of underlying assets is particularly critical. A completely transparent and credible display is conducive to investors to focus on the structure of underlying assets rather than just the qualification of debt subjects.
 
        On the basis of the above points, blockchain can help core enterprises to strengthen the control of upstream and downstream of the supply chain, take financing income as an additional source of profit, and build customer trust. Industry experience is often one of the key elements for small and medium-sized enterprises to obtain orders from upstream and downstream enterprises and financing support. The traditional situation of obtaining orders through relationships in the past is gradually being broken. The refined management of enterprise cost elements also requires experienced small and medium-sized enterprises to serve it. Small and medium-sized enterprises that have experienced several rounds of economic cycles and have survived are also more favored by the financiers, The key is the proof of historical experience. Blockchain can record the behavior of the target enterprise in chronological order to form a trusted certificate of deposit of a third party, so as to help enterprises realize digital credit appreciation.
 
        Blockchain can help core enterprises give full play to their credit transmission ability, so as to benefit the upstream and downstream small and medium-sized enterprises. In the financing scenario, it can well make up for the disadvantages of small and medium-sized enterprises due to their lack of qualification and strength. The three key points of financing improvement, the improvement of credit scale, the acceleration of capital turnover efficiency, and the reduction of financing costs, need to be gradually cultivated by enterprises. Blockchain helps to establish their own financing structure on the basis of compliance, thus helping the growth of the overall financing level of enterprises. The core enterprises have met the access conditions of financial institutions, obtained a certain amount of credit from financial institutions, and the basic financing cooperation mode of both sides has successfully realized the pilot operation.
 
        What is worth emphasizing here is that if a core enterprise cannot be in the cooperation Library of financial institutions, such as industry attributes, credit investigation records or litigation conditions do not meet the requirements of financial institutions, how to introduce blockchain technology is futile, and blockchain cannot solve the problem of policy access of core enterprises or industries. The expected business scale and volume are relatively large, specifically referring to the fact that financial institutions often need to have a certain amount of human and system construction investment to develop corresponding financial products. If the expected scale is small and the financial income is small, financial institutions will have a situation of making ends meet and their willingness is relatively low. Specifically, core enterprises should have a sound ERP system, which should have clear ground operation functions from customer registration, application, procurement, transportation, warehousing, delivery and other links, and should have a strong process tracking embodiment of the logistics and capital flow information of the supply chain. The blockchain system is combined with the above systems to show all links of the supply chain transparently and visually.
 
        In order to further enhance the authenticity of the data on the chain, on the one hand, the information flow, logistics and capital flow can be fully reflected through the time sequence. On the other hand, some paper documents involved in the supply chain process, such as invoice documents, contract documents, customs declaration documents, and transaction documents with other core enterprises, can enhance the authenticity of the data, At the same time, with the help of relevant Internet of things equipment to collect information (such as transport vehicle GPS, goods in and out of the warehouse rfid/nfc data, weighing information) to provide corresponding data support. With the help of smart contracts, automatic transaction verification of data is realized, and the operation cost of transaction forgery is increased. Traditional supply chain finance is mainly aimed at the core enterprise mode of n+1+1, that is, the upstream supplier of N, a core enterprise, and a factoring company under the name of a core enterprise. Due to the relationship between the core enterprise and the factoring company under the name, both sides have established an absolute trust mechanism, and the advantageous function of blockchain is difficult to play. It can only be done when both core enterprises and financial institutions participate.
 
        This is a relatively mature scenario for the application of blockchain in the supply chain finance scenario at present. By forming a set of tamper proof blockchain digital vouchers from the accounts payable of core enterprises and subordinate units, they are issued in the internal units of core enterprises according to certain rules, and have the characteristics of confirmed rights, holding, splitting, circulation, financing, traceability, etc. (1) System connection: financial institutions and commercial banks sign a total to total overall cooperation agreement, and directly link the business flow, contract flow, logistics, capital flow and other key point data of the core enterprise ERP system in chronological order, and the financial institutions will give a certain amount of credit according to the asset strength of the core enterprise.
 
        (2) Supplier recommendation: the core enterprise will directly recommend the primary suppliers that may have the financing needs of accounts receivable to the financial institutions, and the financial institutions will conduct the compliance access audit on the suppliers one by one; For Tier 1 suppliers approved by financial institutions, their upstream tier 2 suppliers can be recommended to financial institutions, and the financial institutions will conduct compliance access audit on tier 2 suppliers one by one. Similarly, tier 2 suppliers approved by financial institutions can also be recommended as Tier 3 suppliers, and so on. (3) Financing application: on the premise of confirmation by the core enterprise, tier 1 suppliers that have formed accounts receivable can apply to financial institutions for financing, or split the confirmed accounts receivable to Tier 2 suppliers, and the tier 2 suppliers can apply to financial institutions.
 
        (4) Review and loan: after the financial institution has verified the right of the core enterprise, it will collect the copies of invoices, statements and other relevant materials from the supplier. At the same time, it will confirm that the account for the payment of the core enterprise is a special regulatory account that has been opened, and sign the contract, and then it can start the loan;. Without using blockchain, traditional enterprises can also operate in offline mode, reverse factoring or the "X-letter" mode of Chinese Enterprise Cloud payment. (1) Operating in a purely offline way, the core enterprise confirms its rights every time by stamping the official seal. The amount of a single business is generally small, and the number of operations required is huge. Moreover, the operation process required for the internal approval of the core enterprise every time is cumbersome, which is often difficult to meet the requirements of supplier financing efficiency.
 
        At the same time, the pure offline operation method is easy to lead to some deficiencies in the collection of credit data. For the financial hook with strict loan review, there will often be supplementary information, and the financing experience is relatively poor. And it is easily affected by the willingness of core enterprises to confirm their rights;. (2) Reverse factoring mode: the ERP of the core enterprise is directly connected with the financial institutions, synchronized once a day, synchronized to the products of the core data pool. The difficulty is that the business factoring mode only stays at the primary supplier, and cannot be extended to the 2-N supplier, and it is not an easy thing to connect with the ERP system of the core enterprise. (3) The "X-letter mode" transforms the right confirmation behavior of core enterprises from pure offline to online, which improves the efficiency compared with pure offline business, and also allows core enterprises to get rid of the behavior of requiring a large number of offline documents, and transmit credit to multi-level suppliers, which is transferable, divisible and discountable.
 
        However, the core difficulty lies in the difficulty in confirming the authenticity of multi-level trade, the "double flower" problem or the effectiveness of electronic certificate litigation. At the same time, the x-trust model also has high requirements for the scale of a single core enterprise. The x-trust model based on a single core enterprise is difficult to achieve a breakthrough from "n+1+n" to "n+n+n". The level of refinancing ability is usually the key factor for core enterprises to give full play to their financing advantages. In order to enrich the diversified refinancing solutions of core enterprises and improve the leverage ratio, it is necessary to establish a clear and credible project structure for the existing financing business, which is convenient for the review and review of refinancing institutions, so as to increase the financing strength of refinancing institutions to core enterprises.
 
        Refinancing business is generally divided into commercial bank re factoring, asset securitization, asset package transfer and other methods. For example, taking the ABS business of asset securitization as an example, the market interest rate of bonds is often based on the qualification of the debt subject and the basic table of underlying assets
 
        
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