supply chain finance

Gambling Man

by Lionel Barber  · 3 Oct 2024  · 424pp  · 123,730 words

ecosystem: ARM, Grab, even a revived WeWork providing office space. When asked where the funds would come from, Masa pointed to Lex Greensill, the Australian supply-chain finance entrepreneur backed by the Vision Fund. Greensill, a former Queensland melon farmer, aspired to become a global fintech champion. With his four private planes, Savile

Seven Crashes: The Economic Crises That Shaped Globalization

by Harold James  · 15 Jan 2023  · 469pp  · 137,880 words

at the very earliest stages of that.”88 He looked like a financial Wizard of Oz. Greensill engaged in a particular apparently niche activity called supply-chain finance. Historians of finance see this business as the oldest application of finance. Merchants buy and then ship goods, but they do not have the money

Digital Accounting: The Effects of the Internet and Erp on Accounting

by Ashutosh Deshmukh  · 13 Dec 2005

costs Product costs Material costs Supply chain inventory costs SO processing costs lost sales Customer profitability?? Transportation-out costs Returns costs Warranties costs Service costs Supply chain financing costs Supply chain costs by definition include costs across the supply chain, including order processing costs, transportation-in and -out costs, material costs, product costs

The Pyramid of Lies: Lex Greensill and the Billion-Dollar Scandal

by Duncan Mavin  · 20 Jul 2022  · 345pp  · 100,989 words

anyone hearing him would think the deal was as good as done. He was also proposing deals that were much more complicated than the simple supply chain finance model, relying on multiple layers of default protection or complex structures and funding methods. Often the programmes Lex conjured up fell into an accounting

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multibillion-pound foundation. The trust’s top management suggested it could fund the TReFS programme. But it had no expertise or experience of running a supply chain finance programme and ultimately the idea never took hold. Bigwigs in Morgan Stanley found themselves in talks with UK authorities, including officials from the Bank

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were – sort of – back. Guttridge, in a jargon-filled interview with a trade publication around this time, said that the appetite among clients for supply chain finance was taking off, ‘driven by the need to improve returns on invested working capital and the search for global operational productivity improvements.’ She hired Lex

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financing techniques has also sprung up, with names like dynamic discounting, early payment discounts, accounts receivable financing, letters of credit. A version of factoring called supply chain finance – SCF, or sometimes ‘reverse factoring’ – emerged within the last few decades. Some in the industry trace its beginnings to developments in the auto industry

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bank can provide cheaper financing. The use of SCF has grown quickly. By 2017, about two-thirds of the biggest companies in Europe ran a supply chain finance programme, according to accountants PricewaterhouseCoopers (PwC). But there’s room to grow further. For the most part, banks that offer SCF programmes have stuck

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management houses that ran billions of dollars in investments for wealthy clients like company pension plans and super-rich individuals. He sold some of his supply chain finance loans, the best stuff, to big European and Japanese banks. He also tapped corporate treasury departments; the biggest global companies like Vodafone or Boeing

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was especially keen to meet people who worked on something innovative or unusual. One of those bankers was Lex Greensill, who was making waves with supply chain finance. Supply chain finance was exactly the kind of esoteric business that piqued Heywood’s interest. When he met with Lex, Heywood was intrigued by the potential for

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markets guru named Piers Harris – asked for a little more time with the TfL executives to explain the bank’s supply chain finance programme. Lex introduced himself as Morgan Stanley’s global head of supply chain finance. His colleagues were astonished – Lex had just made up a global title that gave him a massive promotion.

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chance meeting of Heywood and Greensill at Morgan Stanley might have ended there, with Lex occasionally knocking on the door at the civil service, pitching supply chain finance programmes, invoking his brief relationship with the Whitehall mandarin to enhance his own reputation. But then the door opened wide. The UK economy was

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pay for the maintenance of Voyager air-to-air refuelling plans and the construction of some new Eurofighter Typhoon jets. Another time, he suggested using supply chain finance to pay for a multibillion-pound nuclear submarine. Ultimately, these suggestions didn’t go anywhere, though they did raise eyebrows among Whitehall staffers, who

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office. The reality was somewhat different. The meeting had come about after US Treasury officials working with small businesses asked their UK counterparts about the supply chain finance programmes that Lex had advised on. Lex visited the White House twice and met Obama just once, alongside dozens of other businesspeople. Cameron’s

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to. Gorman invited Lex to Florida, where he owned an expansive waterfront property. Lex turned on the charm and explained his vision of a global supply chain finance business. By the end of their meeting, instead of Gorman selling tractors to Greensill Farming Group, Lex had persuaded the veteran businessman to invest

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, about $23 million of it. He also got trade credit insurance, partly from the giant insurer AIG. Initially, the model operated as a straightforward supply chain finance programme. It did exactly what Lex, Reynolds and Barnes had said it would, paying invoices more efficiently and lowering BSi’s costs. But it didn

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years, Lex was often reduced to bottom feeding the riskiest clients and pushing the boundaries on what could viably pass through a supply chain finance programme. In 2012, he arranged a supply chain finance programme with the owners of Griffin Coal, a giant mine more than 200 kilometres south of Perth in Western Australia. Griffin,

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its first transaction with Greensill in 2014. Lloyds Bank also worked with Greensill from about 2015, and had more than £1 billion invested in Greensill supply chain finance loans. Sometimes clients were brought on in part through Taulia, the payments platform. Taulia was a bit like PrimeRevenue. It had the technology to

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. It would stop processing cash transactions. Instead, Greensill Bank started targeting larger, longer-term deposits. And it started to use those loans to fund supply chain finance deals sourced by Greensill Capital. The bank paid better interest rates than you could get pretty much anywhere else in Germany, and attracted deposits from

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later that the relationship was riddled with potential conflicts. First, Greensill signed an exclusive partnership agreement with a Scope subsidiary to provide ratings on its supply chain finance loans. Also, Maurice Thompson, the chairman of Greensill’s own board, was an investor in Scope and sat on its board. (Scope’s policies

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of their close relationship was that GAM’s investment into Greensill’s assets began flowing freely. Haywood’s ARBF fund made its first investment in supply chain finance assets sourced by Greensill in October 2015. The deals started small. Initially they were simple SCF investments. But they grew, and changed, and morphed

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actually closed anyway). By spring of 2018, GAM managers told Haywood that he couldn’t enter any more transactions with Lex unless they were straightforward supply chain finance deals. They had also launched Project Dill, an investigation into Haywood’s conduct. They hired two separate groups to conduct the probe. One of

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. In a glossy magazine the bank published that year and distributed to its high-net-worth clients, Credit Suisse executives gushed over the promise of supply chain finance. The article, headed ‘Good Mood Included’, emphasized that these were safe, reliable investments with a broad benefit to investors and corporate clients alike. SCF

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and Citi and in the UK government. It also said: ‘He advised both Downing Street and the White House on the launch of their own supply chain finance initiatives.’ Lex talked gushingly of democratizing finance, of having small businesses close to his heart, though he also said that clients were typically large

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The Obligors After my first run-ins with Lex and Credit Suisse, I became more methodical. Every time Credit Suisse published documents related to the supply chain finance funds, I would read through them thoroughly, call round my well-informed sources and check what other information was available to the public. And

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biggest insurance companies providing coverage to the funds. Some of the obligors were huge, well-known companies that you’d expect to find in big supply chain finance programmes run by traditional banks – the likes of Coca-Cola, Vodafone or General Mills. Others were not. Some of them were start-up businesses

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if it defaulted on the loan payments. The Deal Partners charge document also linked the Greensill funding to a separate transaction altogether, a 2018 supply chain finance deal that Greensill had arranged involving the sale of tens of millions of dollars’ worth of mobile phone handsets from Chinese telecoms companies Huawei Technologies

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, an experienced banker with a career at Citi and Standard Chartered under his belt, and a handful of top executives from technology start-ups and supply chain finance technology platforms such as Taulia. Neil Garrod, the former treasurer at the major Greensill client Vodafone, also jumped across to Greensill to become CFO.

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little guy, like his parents’ farm. He would democratize capital and make finance fairer. But that’s not what happened. There was a legitimate supply chain finance programme at Greensill, and it counted among its clients some major organizations like Boeing, Vodafone, General Mills and the UK National Health Service. This was

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also harm small businesses. The programmes that Lex ran had a mixed track record. In Australia, where Lex had become the dominant provider of supply chain finance, the small business ombudsman launched an investigation in 2019 into a wave of SCF that was sweeping across the country. Several big Australian companies were

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programme at a slightly lower cost, undercutting Citi at the last moment. In effect, it meant Greensill had been awarded a contract to provide a supply chain finance programme to the public sector that Lex himself had proposed while working inside Whitehall. Regardless, it was a major coup. Lex frequently invoked the

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FreeUp and Greensill could turn that into a gold mine. Crothers introduced the business to Lex. He was interested. He saw it as similar to supply chain finance but, instead of transactions between suppliers and buyers, FreeUp dealt with payments between employers and their staff. Those payments, the obligations to pay staff,

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Future Receivables’. This referred to one of the most controversial aspects of Greensill’s business, and Downes was highlighting it for everyone to see. Typically, supply chain finance programmes involve extending loans backed by actual transactions – actual amounts owed by one company for goods received from another. Lex and Sanjeev had entered new

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Credit Suisse spokesperson emailed me: ‘During this unseen market correction, the fixed income asset class has generally seen record outflows. Despite the adverse markets, the supply chain finance funds of Credit Suisse Asset Management have delivered a solid performance and are outperforming the [sic] peers. All redemptions have been met.’ In fact,

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a little under $25 billion in available funding. This included all the Credit Suisse funds, all their banking relationships, the rump of the GAM Greensill Supply Chain Finance fund (GGSCF), which had somehow survived the Haywood debacle, and Greensill Bank. But $23.5 billion of that funding capacity was already invested in

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a key check on the business, then Lex completely undermined that function. Second, the loan book itself was very problematic. There was some genuine supply chain finance business here. These were mostly safe loans backed by actual invoices between big companies and their suppliers. If the borrower defaulted, there was a real

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decent return on their investments. This ‘hunt for yield’ helped turn a mundane, low-octane business that didn’t generate much profit at all – supply chain finance – into something relatively super-charged. The flood of money from tech investors like SoftBank into anything that looked new and disruptive also strapped a rocket

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business. Several different parliamentary inquiries and reviews have been launched off the back of Greensill’s collapse. There are those looking into the use of supply chain finance by the government, reviewing private sector positions held by civil servants, and considering the need for an overhaul of standards in public life. The

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policies it had taken out with TBCC. Those policies, which were meant to protect investors, were never valid, according to Tokio Marine. The burgeoning supply chain finance industry is almost certain to be heavily regulated – perhaps into oblivion. Global and US regulators are already moving to impose tighter restrictions on how it

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shares and convert wealth on paper into real money. Greensill Capital was targeting a multibillion-dollar IPO before its collapse in early 2021. SCF – Supply Chain Finance, also known as Reverse Factoring, is a kind of banking service that promises to smooth payments between suppliers and buyers of goods. SCF has grown

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come due. Several major global companies provide trade credit insurance, charging premiums based on the likelihood of non-payment. Many of Greensill Capital’s supply chain finance loans were sold to investors on the basis that they were protected by trade credit insurance. Acknowledgements The Greensill saga unfolded across continents and through

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Hermes ref1, ref2 European Banking Association ref1 Ewing, Fergus ref1 EY ref1, ref2 see also Ernst & Young Eyjafjallajökull ref1 factoring ref1, ref2, ref3 see also supply chain finance Fair Financial ref1, ref2, ref3 Fairmac Reality ref1 Fairymead ref1 Fan, Colin ref1, ref2, ref3, ref4 Farrell, Maureen ref1 FCA see Financial Conduct Authority ‘fee

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Formula One ref1 ‘Four Eyes Principle’ ref1 FreeUp ref1, ref2 Friedman, Alex ref1, ref2, ref3, ref4, ref5, ref6, ref7 Galligan, Shane ref1, ref2 GAM Greensill Supply Chain Finance fund (GGSCF) ref1, ref2 Gapper, John ref1 Garrod, Neil ref1, ref2, ref3, ref4, ref5 GBM Banca ref1 General Atlantic (GA) ref1, ref2, ref3, ref4,

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ref19, ref20, ref21, ref22, ref23, ref24, ref25, ref26 Absolute Return Bond Fund (ARBF) ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9 regulators ref1 Global Supply Chain Finance Forum ref1 Global Trade Review (trade finance publication) ref1 Goldman Sachs ref1, ref2 Gorman, John ref1, ref2, ref3, ref4, ref5 Gottstein, Thomas ref1, ref2 government

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/future ref1, ref2, ref3, ref4 registration agents ref1 Rehbein ref1 Reuters News Agency ref1, ref2 reverse factoring ref1, ref2, ref3, ref4, ref5 see also supply chain finance Reynolds, Charles ref1, ref2, ref3 Rigzone ref1 Rio Tinto ref1 Ritz-Carlton hotel, Half Moon Bay ref1 Rohner, Urs ref1 Rolet, Xavier ref1 Rothschild ref1

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, ref2, ref3, ref4, ref5, ref6 Steinway development ref1 Stephenson and Turner (S&T) ref1 Sumitomo ref1 Sunak, Rishi ref1, ref2 Sunday Times, The (newspaper) ref1 supply chain finance (SCF) ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12, ref13, ref14, ref15, ref16, ref17, ref18, ref19, ref20, ref21, ref22, ref23,

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ref7, ref8, ref9, ref10, ref11, ref12, ref13, ref14, ref15, ref16, ref17, ref18, ref19, ref20 trade finance ref1, ref2, ref3, ref4, ref5, ref6, ref7 see also supply chain finance Tradeshift Networks ref1, ref2 Transaction Risk Mitigation (TRM) ref1, ref2, ref3, ref4, ref5 Transport for London (TfL) ref1 Trehan, Ravi ref1 Trump, Donald ref1 Uber

A Hacker's Mind: How the Powerful Bend Society's Rules, and How to Bend Them Back

by Bruce Schneier  · 7 Feb 2023  · 306pp  · 82,909 words

holding the (empty) bag. Consider the case of Greensill Capital, which collapsed spectacularly in 2021. Its unsustainable expansion over the course of ten years—from supply-chain finance startup, to multinational middleman with a $4.6 million debt load, to insolvency—was accelerated by investments and loans from SoftBank, who made millions in

Inside the Nudge Unit: How Small Changes Can Make a Big Difference

by David Halpern  · 26 Aug 2015  · 387pp  · 120,155 words

relevant chief execs as it did on a structural change to state funding. Similarly, extensive efforts were made to encourage large firms to engage in supply chain finance. While Rolls-Royce, with its brand name and cash holdings, might be able to borrow from banks at 2 per cent, its many suppliers might

Vulture Capitalism: Corporate Crimes, Backdoor Bailouts, and the Death of Freedom

by Grace Blakeley  · 11 Mar 2024  · 371pp  · 137,268 words

.71 In return, Son demanded that the fund lend only to Greensill Capital. SoftBank pumped hundreds of millions of dollars into Credit Suisse’s specialist supply chain finance fund, which went straight into Greensill’s coffers. In return for Son’s generosity, Greensill lent generously to many of the firms in which SoftBank

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, “NHS England Chair Faces Demands to Explain Role in Greensill Lobbying.” 79. Robert Smith, “Greensill Tried to Use NHS Pay ‘Gift’ as Lever to Sell Supply Chain Finance,” Financial Times, April 22, 2021, https://www.ft.com/content/b76df097-8f3c-4310-92ac-b0aaa2fa5646. 80. Kalyeena Makortoff, Ben Butler, and Joseph Smith, “Greensill Scandal

Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die

by Eric Siegel  · 19 Feb 2013  · 502pp  · 107,657 words

. HP is a progressive analytics leader. Its analytics department houses 1,700 workers in Bangalore alone. They boast cutting-edge analytical capabilities across sales, marketing, supply chain, finance, and HR domains. Their PA projects include customer loss prediction, sales lead scoring, and supplier fraud detection. Gitali Halder leads HP’s analytics team in

The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion

by Eliot Brown and Maureen Farrell  · 19 Jul 2021  · 460pp  · 130,820 words

: Flight path for N1872, FlightAirMap website, accessed Aug. 26, 2019. SoftBank had just invested in Greensill’s business: Duncan Mavin, “SoftBank Invests $800 Million in Supply Chain Finance Firm Greensill,” Wall Street Journal, May 13, 2019. CHAPTER 35: PARANOIA story published after his departure: Kirsten Grind, Sarah Krouse, and Jim Oberman, “Star Fidelity