When KPN, the Dutch telecoms group, last year decided to extend how long it took to pay suppliers it knew it would not be a popular decision. So, as it moved its payment terms from 45 to 90 days, it looked into a mechanism called supply chain finance. “Obviously [the lengthening of payment terms] is a negative thing for suppliers. So we were looking for a sweetener to smoothen the implementation and then we found this,” says Toon Huiskes, a financial manager in KPN’s procurement division.

Supply chain finance is seen by many supply chain experts and managers as the great hope for easing problems with suppliers. Although it actually refers to several different solutions, at its most basic it allows both the buying company and the supplier to improve their working capital – a crucial attribute given the recent financial crisis. Companies such as J Sainsbury, Nestlé, Syngenta, retailer Metro and truckmaker Volvo have all used it.