Failure To Adhere To The Agreement About Supply-Chain Finance (Essay Sample)

Supply Chain Finance Student’s Name Institutional Affiliation Supply Chain Finance Major Facts Supply chain finance is a current business trend that enables business to obtain finances. The solicited funds are managed by the same firm the funding is sourced. It is an alternative source for obtaining finances to carry out the business with restrictions attached. Companies and other entities must agree to terms and conditions of the supply chain before getting the financial aid. They should also permit close monitoring of business activities in terms of human resources management and payment to creditors and suppliers. This will allow the supply chain finance to monitor payment to the workers and evaluate if they are beneficial to the business. Supply chain finance takes care of the business failure to pay suppliers by defaulting them by ensuring payment to them (Carter, Rogers, & Choi, 2015). This upholds the firm reputations to suppliers and the general public. They also aid in management of working capital. Major Problem Failure to Adhere to the Agreement About Supply-Chain Finance A business entity should know the terms and conditions of the supply chain finance. This is to aid them in the management of their funds they obtained. The supply chain has offered business an alternative way of getting funding of day-to-day running activities, that is, working capital. The business entities should know the interest rate of this supply chain before entering to the binding agreement (Wuttke, Blome, Heese, & Protopappa-Sieke, 2016). Solutions to the Problems 1. Businesses should obtain finances from credible and efficient money-lending institutions such as banks. This will make them decide on how to use their working capital without monitoring from external firms. It also encourages business to be dynamic, that is, changing without any barriers according to the market feature. Advantages • Avoiding exploitation since it has no regulatory body. • Encouraging innovation, leading to an increase in production. Disadvantages • It encourages wastage because there is no strict budget on the loan. • It can lead to insolvency causing closure of the business. 2. Supply chain finance should promote the autonomy of business. The financial institutions should only offer capital to companies and leave the affairs of the business to be carried out by the management. They just act as a capital lending body in the form of loans. Advantages It encourages proper utilising of the workforce without external influences. Disadvantages It gives room for massive sourcing of loans. 3. Ethical decision making should be ensured by the management before joining and signing a contract with supply chain management. Advantages It enables the business to evaluate the methods of creation of goods and services and the human resources. This will avoid duplication of roles, which could be done by supply chain management. Disadvantages Misuse and misappropriation of solic...