Under the motto “Of tariffs and tensions: SCF for resilient supply chains” the 7th SCF Hub at TUM Campus Heilbronn brought together experts from industry, academia, and the financial sector – both online and on site. Leading up to the event, the “Supply Chain and Finance Week” provided a multi-day platform for international researchers to exchange ideas in the field of Supply Chain Finance.
Tariffs Put Pressure on Cash Flow
The 7th SCF Hub focused on a new reality: tariffs are straining international supply chains and are increasing trade-related risks. Tariffs reaching up to 50 percent of the goods’ value are draining liquidity from supply chains, eroding profit margins, and amplifying volatility in supply and demand. “Tariffs are more than just political tools – they act as structural shocks,” emphasized host Prof. Dr. Wuttke, Professor of Supply Chain Management at TUM Campus Heilbronn. His conclusion: “Supply Chain Finance does not address the root causes, but it can help to cushion the impact of the tariff crisis.”
With supply chain financing, suppliers receive their money well before the invoice due date. Third parties provide interim financing, while customers continue to benefit from standard payment terms of 60 to 90 days. Tariffs, however, are due immediately upon import and negatively impact cash flow. This is where traditional SCF modes reach their limits. “Standardized solutions for specialized tariffs financing are still lacking,” Wuttke notes.
Regionalization Reduces Risks
“In the end, it is the customers who pay the tariffs,” explains Dr. Alexander Regelmann, Head of the Center of Expertise at the specialty chemicals company Clariant. His observation: “Many suppliers can no longer shoulder the burden within the supply chain alone and are trying to pass the costs along the chain,” Clariant, in turn, largely relies on local supply chains in Europe, China, the U.S. and Latin America. “This significantly reduces costs and risks,” says Regelmann.
However, Nearshoring is not a viable option in all cases – this was also demonstrated at the SCF Hub. The complexity of many supply chains prevents rapid restructuring. Numerous networks have evolved over the years.
In light of increasing uncertainties, contractual conditions are becoming more significant. Hardship clauses, as well as provisions for force majeure or legal changes, are gaining importance: “Who is bearing the risk of newly imposed tariffs must be clearly defined in each individual case,” emphasizes Dr. Jan Conrady, Partner at the law firm Clifford Chance.
SCF Injects Liquidity into Supply Chains
Supply Chain Finance can help stabilize commercial relationships by creating financial flexibility for both suppliers and buyers. The purchasing companies act as the initiators and the financing is provided by banks and investors. Specialized providers and platforms act as intermediaries. Artificial Intelligence technologies are increasingly supporting risk management: The analysis of freight and customs data, liquidity indicators, and supplier indices enables the optimizations of SCF programs and reveals risks even deep within the supply chain,” explains Karel Krejčí of AI specialist Calculum.
Classic SCF offers such as Reverse Factoring need time, transparency and the trust of everybody involved: “Companies with existing SCF programs are at an advantage. They can quickly adjust and expand their programs,” says Lena Stelzner, Sales Director at CRX Markets. She cautions against viewing SCF merely as a tool for optimizing Working Capital: “Supply Chain Financing requires cross-functional thinking, and it is not solely the responsibility of the Treasury.” Procurement, in particular, must be involved, as it is the one approaching supplier with the offer.
New Models for Times of Crisis
In recent years, alternatives have emerged. “Simple, fast solutions for times of crisis, in which it is difficult to negotiate payment terms with suppliers,” is how Stelzner describes financing models that do not require supplier involvement. In such cases, a company commissions a Payment Service Provider to pay the supplier on the due date as usual. The Payment Service Provider then grants the company an extended payment term, which is bridge-financed by third parties. “Unlike traditional programs, these solutions focus purely on cash flow optimitarion,” notes Wuttke, highlighting the difference.
Siemens is considered a pioneer in Supply Chain Finance. Supply chain financing requires a systematic perspective,” says Friedemann Kirchhof, Head of Supply Chain Finance at Siemens. Siemens explores how AI-supported data analytics can expand supply chain financing offerings. The company is currently analyzing which suppliers are affected by tariffs and is working to increase transparency. “SCF does not protect against tariffs, but it strengthens the resilience of the supply chain by providing liquidity,” emphasizes Kirchhof in Heilbronn.
Other companies are more hesitant: “When we talk about uncertainty, we often think about cash flow risks. But uncertainty also slows down strategic decision-making,” explains David Wuttke. “Companies are asking the question: Will my supply chain look the same tomorrow – or will I soon be negotiating payment terms with different suppliers?” The researcher advises taking proactive measures in the face of the tariff crisis and using supply chain finance (SCF) strategically: “SCF can effectively mitigate short-term liquidity constraints.”