Key Drivers and Challenges in the Adoption of Supply Chain Finance

This chapter examines the key drivers influencing supply chain finance (SCF) adoption, including negotiation power, collaboration, digitization, and institutional support; and identifies the major challenges that impede the successful deployment of SCF solutions. Building on the previous work, the chapter highlights how negotiation, trade digitization, and collaboration act as success factors that collectively foster more efficient SCF implementation. Empirical evidence from multiple contexts shows that firms benefit from SCF when they integrate it with robust operational practices and adapt it to their market conditions. However, the chapter also notes that power imbalances between buyers and suppliers can undermine these gains if negotiators adopt distributive tactics at the expense of trust and mutual benefit. In illustrating SCF’s wide-ranging impacts, the chapter explains how digital platforms bolster information sharing, thereby reducing credit risk and lowering barriers to entry for smaller. Yet technology adoption is often constrained by limited interoperability and inconsistent data standards. By examining empirical studies and theoretical frameworks, this chapter underscores SCF’s capacity to optimize working capital, mitigate liquidity risks, and fortify supply chain resilience, particularly through integrative negotiation, proactive partnership with banks, and the deployment of digital tools. Nevertheless, it concludes that a holistic approach is paramount for harnessing SCF’s full potential.