Disclosed this Wednesday (17) by Valor Econômico newspaper, the BNDES' proposal to allow large companies to act as loan guarantors for their commercial partners, customers and suppliers is excellent news for small and medium-sized companies. These are generally being hard hit by the covid-19 pandemic and they will need every support to be able to recover. However, more broadly, the BNDES proposal is also good news for the financial management of supply chains as a whole.
I explain. A large company, with a good credit rating, manages to obtain excellent interest rates in the national and international banking market, since its risk of default is considered low. A small or medium-sized company, on the other hand, without a credit rating by major international agencies, needs to seek working capital lines of credit in the domestic banking market with interest rates three to four times higher. This “additional” cost is passed along the supply chain until it reaches the final consumer.
Figure: Supply Chain Finance allows large companies, suppliers and banks to work together to make resources available for the supply chain. Source: mohamed hassan by Pixabay
However, despite not having a credit rating, the small supplier or customer has a contract with the large company. This is a real “collateral” and, therefore, should significantly reduce the “risk” of default perceived by the lending financial institution. That is, the BNDES proposal makes it possible to equate the difference between the risk of default assessed by the large partner company and the bank, allowing the latter to offer credit to small companies with interest rates closer to those offered to large companies, which enter as guarantor, “borrowing” your rating.
As presented in ILOS Panorama – Supply Chain Finance, large companies already use various devices to “finance” their small partners, such as consignment stocks, acquisition and transfer of inputs, and even the creation of financial institutions with the aim of financing them with their own resources. The BNDES proposal will bring a new and important instrument in this regard, helping not only small and medium-sized entrepreneurs to obtain cheaper credit at this time of post-pandemic economic recovery, but also helping large companies to reduce the costs of their supply chain and increasing its competitiveness.
Leonardo Julianelli
https://ilos.com.brExecutive Partner of ILOS. Graduated in Production Engineering from EE/UFRJ, Master in Business Administration from COPPEAD/UFRJ with extension at EM Lyon, France, and PhD in Production Engineering from COPPE/UFRJ. He has several articles published in periodicals and specialized magazines, being one of the authors of the book: “Sales Forecast: Organizational Processes & Qualitative and Quantitative Methods”. His research areas are: Demand Planning, Customer Service in the Logistics Process and Operations Planning. He worked for 8 years at CEL-COPPEAD / UFRJ, helping to organize the Logistics Teaching area. In consultancy, he carried out several projects in the logistics area, such as Diagnosis and Master Plan, Sales Forecast, Inventory Management, Demand Planning and Training Plan in companies such as Abbott, Braskem, Nitriflex, Petrobras, Promon IP, Vale, Natura, Jequití, among others. As a professor, he taught classes at companies such as Coca-Cola, Souza Cruz, ThyssenKrupp, Votorantim, Carrefour, Petrobras, Vale, Via Varejo, Furukawa, Monsanto, Natura, Ambev, BR Distribuidora, ABM, International Paper, Pepsico, Boehringer, Metrô Rio , Novelis, Sony, GVT, SBF, Silimed, Bettanin, Caramuru, CSN, Libra, Schlumberger, Schneider, FCA, Boticário, Usiminas, Bayer, ESG, Kimberly Clark and Transpetro, among others.
