Eximchain is a project that aims to combine the innovative concept of Supply Chain Finance with the blockchain and smart contracts. This article will give insight into the concept of Supply Chain Finance and how Eximchain’s offering brings supply chain finance and the blockchain together.
What is Supply Chain Finance?
Supply Chain Finance allows large organisations and more importantly small and medium-sized enterprises (SMEs) to sell their invoices at a discount to banks or other financiers, which allows the supplier to get faster access to the money they are owed. Buyers benefit as they are usually allowed more time to pay and banks benefit as buyers are seen as less of a credit risk than suppliers. It’s seen as a “win-win” in the supply chain industry for all parties and companies such as Sainsburys, Nestlé, retailer Metro and TruckMaker Volvo have all used it.
Where does Eximchain come in?
Eximchain seeks to bring visibility to the global supply chain finance ecosystem by using smart contracts on Quorum the JP Morgan version of Ethereum which allows for more privacy. Eximchain aims to offer seamless integration into the existing processes of SME’s. Their tool is aimed mainly at SME buyers and suppliers. They have built supply chain focused smart contract tools that will not only help supply chain SMEs optimise their processes but will also allow other developers to build their own applications on top of the Eximchain platform. The Eximchain platform will allow buyers and suppliers to carefully design supply chain smart contracts that maximise profit allowing more visibility into demand, inventory and operations through the use of the Quorum decentralised network. The added transparency will allow for financiers such as banks to gain more visibility into the supply chain operations, allowing them to assess risk through transparent smart contract information. This in turn allows SMEs to gain access to affordable capital sources as well as helping them optimise their own in-house processes.
Why the need?
Increases trust across the supply chain
Buyers can now more easily verify different supplier’s reliability and reputation on the Eximchain platform, resulting in them being more agile and have greater insight into the suppliers operations and processes.
Reduces risk for financiers
By enabling banks and financiers to have the ability to monitor the supply chain financing process in real time, lenders can better understand the actions taken by purchasers and suppliers resulting in improved risk assessment and return on their investment analysis.
Increasing working capital for SMEs and buyers
SMEs that often face difficulty obtaining affordable credit will now be able to receive an alternative credit source. For example, in China banks require 5–20% of the loan amount as a deposit due to the credit risk of SMEs. Through Eximchain’s transparent and trusted platform other financiers such as angel investors could undercut this deposit fee and banks could potentially reduce their deposit fee due to the use of the Eximchain platform or eliminate it altogether.
Helping SMEs with tools optimise their processes
Using Eximchain companies will be able to visualise their entire supply chains, build rules-based applications and monetise their solutions.
The Eximchain Token
Eximchain tokens will be used to pay network fees, validate state changes, and execute governance. The tokens will also be used to access applications and solutions built on the Eximchain network. Furthermore, Eximchain has masternodes that allow holders to generate passive income by participating in their governance system.
In conclusion by using Blockchain technology Eximchain eliminates traditional supply chain barriers and integrates suppliers, financiers, and buyers both big and small into a transparent, secure global decentralised network.