The team at Nedbank CIB provides an overview of the bank’s supply chain finance offering and short-term supply chain bridging finance facility.


While most of us were hopeful that 2021 would bring relief from the challenges of Covid-19 and the spate of lockdown responses, the pandemic appears to have had other ideas, and a third wave that is now gripping South Africa is having a devastating impact, not only on the health of people, families and communities, but on many businesses as well.

Most of these businesses were only beginning the process of recovery when the third wave hit, and level four lockdown restrictions were once again implemented. For many, the only silver lining to the dark Covid-19 cloud is that in 2021, they are more aware of the challenges they could face, and slightly better prepared if they have applied the tough lessons learned last year.

According to Mike Brandon, Head of Customised Trade Solutions at Nedbank CIB, one of the most important, and arguably most valuable, lessons that Covid-19 and the early lockdowns had for SA businesses is the imperative to protect and optimise their supply chains.

“The lockdown restrictions in 2020 led to many businesses having much of their working capital tied up in stock,” he explains. “The effect of this was that even large corporate buyers found they had to delay payment of their smaller suppliers due to the initial lockdowns, which had a knock-on effect all along the supply chain.”

According to Brandon, the imposition of extended payment terms on suppliers was one of the consequences of larger businesses managing their own cash flows. While this was unavoidable, it was potentially disastrous for smaller businesses in the supply chain, most of which depend on regular payments for their survival.

Unfortunately for the larger businesses, however, even though they may have temporarily protected their cash flows by extending payment terms, this approach doesn’t make for a sustainable business model. “Well-functioning supply chains are essential for any business to maintain its own operations,” Brandon says, “so when you cut payments along those supply chains, you effectively also impair your own long-run business capacity”.

This is a scenario that no business can afford, which is why it is imperative that businesses pay special attention to building and maintaining sustainable supply chains that can remain effective even when markets are severely constrained, even by something as far reaching as a global pandemic.

Brandon says that achieving this is not as difficult as some business managers may think. All it takes is some careful planning and a close working partnership with a bank that understands your supply chain challenges, and has the innovative solutions to address them. He contends that Nedbank is such a bank, thanks to its market-leading supply chain finance (SCF) offering, with its innovative short-term supply chain bridging finance facility.

Through its SCF solutions, Nedbank acquires the right to repay the receivable from a corporate client’s supplier on invoice acceptance by the corporate. Early payment is made to the supplier entity at a discount to the face value of the supplier’s invoice. On invoice maturity the corporate buyer simply repays Nedbank, as it would have the supplier. The model essentially gives the supplier access to well-priced liquidity based on the corporate buyer’s risk profile, which means it is able to sustain its operations, thereby enabling the corporate to benefit from a stable and financially stronger supplier base.

“Since 2016, Nedbank has developed into a leading funder of supply chain finance in South Africa,” says Brandon. “Today we have a solid reputation for helping many corporates to enhance their working capital structures and, in tandem, deliver significant benefits to their supplier base.”

He explains that one of the key benefits of the Nedbank SCF solution is that it is “platform agnostic”, so business customers can operate on whichever digital platform best suits their needs. The Nedbank solution then seamlessly integrates with their ERP systems, not only saving them integration costs, but also reducing expenses associated with creditors administration and business control processes and allowing them to negotiate platform costs directly.

“Nedbank is able to work with most leading supply chain platform providers currently operating in the market. This allows us to offer our customers total flexibility and precision on implementation.

“As a bank with a purpose to use our financial expertise to do good, Nedbank is proud to provide best-in-class working capital optimisation solutions and proven supply chain finance programmes that support the recovery, development and growth of the South African economy.”