Toespraak van minister Kamp bij het Supply Chain Finance Forum
Toespraak van minister Kamp (EZ) bij het Supply Chain Finance Forum op 10 december 2014 in Wassenaar. De speech is alleen in het Engels beschikbaar.
Ladies and gentlemen,
There are good reasons to be cautiously optimistic. The economic recovery in the Netherlands is holding. Businesses are investing more, consumers are spending more, and the country as a whole is exporting more. According to Rabobank our growth rate should double next year. And the Organisation for Economic Co-operation and Development is even forecasting that the Dutch economy will experience a growth spurt in 2015.
But, the OECD gave an important warning: the shortage of credit for SMEs is putting the brakes on our economic growth. Unfortunately, this comes as no surprise to you and me; it merely confirms what we already suspected. We know that total loans to SMEs have fallen since the second half of last year. We also know that these problems will not simply go away. The economic crisis has made banks more cautious about lending.
But less credit means that businesses invest less, innovate less and grow less. There are one million SMEs and they are the engine of our economy. If they fail to grow, this will clearly slow our economic growth. That’s why SME-financing has the government’s full attention.
One reason why SMEs get into difficulties if banks don’t provide loans is that they often have to wait a long time for their customers to pay. A payment term of thirty or sixty days is customary. But it is increasingly being extended to ninety days or even longer. During that period an SME has to raise expensive working capital.
So the government is keen to remind everyone of their social responsibilities. But it’s also looking at itself. Central government now pays over 90% of invoices within thirty days. That’s good, but there’s still room for improvement. We’ll continue to remind local and regional authorities to address this issue too.
Ladies and gentlemen,
One way for businesses to get their money faster is accounts receivable financing: selling invoices to third parties in exchange for immediate liquidity. And this instrument is becoming increasingly important now that SMEs are finding it harder to obtain loans. That’s why the government is looking for ways to make it even more widely accessible.
Justice minister Ivo Opstelten and I are examining the option of modifying the ban on selling invoices to third parties as a standard clause in payment conditions. The ban provides clarity for customers, but hinders SMEs. Factoring companies and banks say that modifying the ban could yield an extra 200 million euros or more in business finance. This projection is supported by findings in Germany, which has already taken this step.
Accounts receivable financing is an important tool in the mix of debt and equity financing, but for SMEs it is not always an attractive option. Financiers charge relatively high interest rates for SMEs due to higher risk perception and assessment. Supply chain finance can offer a solution, because the customer – often a large, more creditworthy company – bears the risk instead of the SME supplier. And since the risk is normally much lower with a big company than with an SME, this could persuade the financier to provide financing at a lower interest rate.
So the customer gives the supplier a payment guarantee. This enables the supplier to obtain advance financing from a bank or other lender. Nothing changes for the customer, but the baker round the corner receives his money after only five days.
It sounds great to improve access to finance at lower cost, but unfortunately, SMEs are often not familiar with supply chain finance, or barely have access to it. There are several reasons for this.
First, there is a lack of incentive for large companies to include SMEs in supply chain finance programmes. What’s in it for them? Nine per cent of large companies do use it, but only for their biggest, most strategic suppliers. It then yields a higher return, because they often do it in exchange for longer payment terms. But precisely because supply chain finance is then used to negotiate longer payment terms, it has acquired a negative image and SMEs no longer see its benefits.
Second, the lack of standardisation means that each supply chain finance programme has to reinvent the wheel. So the transaction costs for SMEs to be included are relatively high.
Third, many organisations have difficulty approving invoice payments on time – an essential part of supply chain finance. And the longer the period between approval and payment, the smaller the benefits.
Fortunately, ladies and gentlemen, none of these problems is impossible to fix. But we do need to address them. And I understand that large companies are willing to do so. So I’m planning to set up a taskforce, which will include businesses, to make supply chain finance available to SMEs in a responsible manner. DSM, Superunie, Randstad, Friesland Campina and Heineken have already expressed a wish to participate. They realise that supply chain finance helps consolidate their ties with their many SME suppliers. I would call on all of you to follow their example.
To speed up the process, it’s useful to provide information, promotion and education, and standardise processes and legal conditions. I understand that the business community is willing to support this by launching a platform to encourage supply chain finance, under the provisional name BetaalMeNu (or PayMeNow). If necessary, the government will facilitate the platform.
Ladies and gentlemen,
The aim of the taskforce is to give a substantial proportion of corporate suppliers in the Netherlands access to supply chain finance. The goal is to generate 2.5 billion euros in extra liquidity. Money that SMEs can use to invest and innovate. So that our economic engine continues to run smoothly and the brakes on growth disappear. For the benefit of all.