The prospect of economic recovery is bringing innovation and growth to programs that help supply chains maintain critical links by supplying flexible enough liquidity to weather contractions and meet the increased demand that could come with an expansion.

Such innovation is filling in cracks where assets traditionally have been denied financing. UPS Capital is a niche player that saw an opportunity to move into supply chain finance (SCF). The subsidiary of Atlanta-based United Parcel Service is leveraging its possession of goods in transit and information about those goods into a program that will advance cash for goods being shipped via UPS, generally from foreign suppliers to U.S. buyers using ocean freight. The company has a similar program for inventory held by U.S. companies in foreign countries.

These two areas have generally been ineligible for asset-based financing, explains Mark Robinson, senior managing director for UPS Capital Supply Chain Finance. "If we have possession of the goods in transit or in foreign warehouses and if we have all the information lenders require, we can open the door to liquidity in cash-intensive activities where financing has been difficult to get," Robinson says. In these cases, UPS Capital provides some of the funding but most comes from partner banks, he notes.

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