Supply Chain

The standards development work undertaken by the Financial Supply Chain Working Group (i.e., FSCWG) will be split over two groups of activities:

1. Group 1 – Purchase Order, Invoice and Remittance
2. Group 2 – Working Capital Finance

The activities in Group 1 have the specific objective to enable both the automation of the ordering, invoicing and remittance processes and the reconciliation processes. The FSCWG will build on existing TWIST Standards and standards elsewhere available. In a broader perspective, the activities in Group 1 will support the automation of existing business processes with the goal of driving inefficiencies out of the financial supply chain.

The activities in Group 2 have the specific objective to enable the automation of working capital financing products and services. In a broader perspective, the activities in group 2 will support the automation of new business processes with the goal of creating new revenue opportunities.

Group 1 Activities: Purchase Order, Invoice and Remittance

The standards development activity has two overall objectives:

• Automation of the ordering and invoicing process.
  • Purchase order collaboration process: a confirmed purchase order is the result of a collaborative process between the purchaser and the supplier. This involves, ordering, requesting amendments, cancelling, enquiring on the status etc.
  • Invoice collaboration process: an approved invoice is also the result of a collaborative process between the purchases and the supplier. This involves invoicing, disputing, enquiring on status etc.
  • It is assumed that the remittance process has already been adequately addressed by existing TWIST Standards.
• Automation of the reconciliation process.
  • Purchase order to purchase order confirmation reconciliation.
  • Purchase order to invoice reconciliation.
  • Invoice to remittance advice to credit advice, to statement reconciliation.

Group 2 Activities: Working Capital Finance

The standards development activity has two overall objectives:

• Automation of the working capital financing process. The list of indicative messages contained in ANNEX C of this document, will be used as a starting point. This process involves a collaborative dialogue between a requesting and a financing party.
• The stimulation of new revenue opportunities in this domain. Working Capital Finance is an area where currently innovation is leading to the creation of new revenue opportunities. In recognition of these business opportunities and TWIST’s established innovative role, the FSCWG will support innovative business processes and information flows in this domain where applicable.

The issues identified so far:

• Accounting treatment of working capital finance schemes.
• The scheme rules will have to reflect the difference between conditional or unconditional acceptance of the goods in the underlying commercial transaction.
• The scheme rules will have to reflect the difference between a revocable and irrevocable payment scenario.
• The scheme rules have to take into account any “know your customer” requirements into account with respect to the relationship between the financier and the supplier (in a reverse factoring model).

Want to be part of the FSCWG?

If you would like to contribute to the work of this Group, then we invite you to contact us at info@twiststandards.org.

Want to follow the progress made by the FSCWG?

Please consult the libraries for this Working Group.