Supply Chain Finance Credit Management System

Supply Chain Finance Credit Management System runs on an online platform, backed by Big Data and AI, to provide credit rating for participants in the real-economy supply chains. It enables whole-process credit management, featuring features real-time credit monitoring and early warning of credit risks. It takes the core enterprise, usually one with high credit standing, as the credit guarantor; a large or medium-sized commercial bank as the financier; to provide four types of financial instruments for other enterprises in a supply chain, such as receivable financing, order financing, prepayment financing, and pledged inventory financing. The system generates efficient and cross-industry solutions to meet the needs of the many upstream and downstream enterprises in a supply chain for fund-raising and credit management. 

Product Models
Product Functions
Application Value
• Core Enterprises
Strengthen financial control, lower debt/capital ratio, and improve financial structure.
Prevent capital chain breakdown, ease their own financial pressure.
Raise their own credit standing, provide financial solutions for other enterprises.
Helps credit risk control and build secure supply chains.   
• Participant Enterprises
Meeting their own financial needs by tapping their own potential credit value.
Consolidating cross-company credit relations, benefiting enterprise image.
Promoting enterprises’ awareness of credit risks and their own credit management.
Benefiting enterprises’ credit record and their future development.
• Financial Institutions
Facilitating assessment of credit risk, and enhancing risk control.
Facilitating risk control in fund-raising projects through real-time monitoring.
Yielding stable and secure returns from investment, and lowering NPL.
Increasing SME financial service and their own competitiveness.  

Operation Process

Introduction of Credit Certification

I. Overview
 Credit Certification is a comprehensive credit evaluation by making use of digitalized rating technology to assess the historical record of the corporate legal compliance, contractual capacity and debt repayment ability, which provides to the market an authoritative business selection standard.
Highlight of Credit Certification:
1. The pattern of economic globalization under the background of the credit economy is bound to be of a great circulation of productive factors driven by the global credit information flow;
2. The independent third party credit certification provides a solution to the increasing credit information asymmetry caused by cross-border optimal configuration of productive factors;
3. It is the first time for enterprise credibility to be assessed by an international credit certification standard, which makes credit standing become a competitive edge in the market for enterprises.
II. Credit Certification Symbol and Definition
The grading of Credit Certification is to evaluate the legal compliance, contractual capacity and debt repayment ability of an enterprise, and express the credit evaluation viewpoint with simple symbols. Credit Certification is classified into three grades and five levels, namely AAAC, AAC,AC,BC,and CCwith “c” standing for “credit”.
 
Table 1 Credit Certification Symbol and Definition
 
 
III. Product Modality


Figure 1 Product Modality of Credit Certification
IV. Application of Credit Certification
1. Self-examination of Credit
Credit self-examination and evaluation is a self-prediction function set for enterprises. Enterprises could update credit information in real-time, check their credit risks in real-time, then control their risks, and actively provide credit records in order to realize the goal of credit enhancement. 
2. Brand Enhancement
Such Credit Certification products as Certification Mark and Enterprise Credit File, are able to enhance brand value and realize the credit enhancement of enterprises.
3. Business Selection
Credit Certification could help the core company of supply chain to select excellent suppliers and distributors to grasp the credit risk of upstream and downstream enterprises and shorten decision-making cycle. Credit Certification could also be used as the admittance criterion of industrial park in screening enterprises before registration, or as the decision-making reference for industrial park to provide financing tutoring, pre-listing tutoring and other services.
4. Supply Chain Finance
Credit Certification could be used as the access condition for the chain enterprises to enter the credit management system of Dagong supply chain. It can also serve as a decision-making basis for a core enterprise to provide financing guarantee for chain enterprises.
V. Information Collection System
The information collection system of Credit Certification mainly offers certified companies such services as information filling, certification applying and order management. It is a data collection terminal.


Figure 2 Information Data Collection System
Table 2 Verification Document List

Note:
[1] Electronic version of credit investigation report of the legal representative or the actual controller----Users could download it from the People’s Bank of China Data Credit Collection Center freely (ipcrs.pbccrc.org.cn).
[2] Scanned copy of enterprise credit report (Bank Version) ----Users could check it from the Bank of Deposit or other query terminals.
VI. Certification Procedure

Figure3 Credit Certification Procedure

Introduction to ABS products in Supply Chain Finance

As for ABS products in supply chain finance, DAGONG is aiming to provide professional and bespoke consulting services for ABS issuing, while supporting enterprises to explore financing channels for standardized products, in order to fulfill their demands. With professional product design services, mature credit rating techniques and ABS credit management system, DAGONG provides a series of customized consulting services for target enterprises regarding capital screening, product design and credit rating.
Underlying assets screening:
The core of risk control is based on ten credit rating techniques, which could filter out the underlying assets that generate sustainable and stable cash flow through the trading relationships between the upstream enterprises and the downstream enterprises.
 
ABS product design:
Through assessing the corporate’s demand, financing cost and the investor’s risk control,DAGONG carries out services including trade structure design, cash flow calculation and  the off-balance sheet demands for target enterprises, finalizing the overall product design.
 
ABS credit rating:
With abundant ABS credit rating experience, DAGONG uses ten core credit rating techniques to unveil the credit risks of structured finance products to provide accurate rating information for investors, which enables them to screen out the valuable products, to provide credit rating services for high credit quality products so as to support the issuers to finance smoothly, and to promote the level of credit management in structured finance products, in order to prevent the credit risk effectively.
 
ABS credit management system:
The purpose of the ABS credit management system is to monitor and visualize the cash flow status during the durations of the ABS products. On the one hand, it strengthens the ability of risk management for ABS, by monitoring the SPV asset pool, asset return and the cash flow payments at a real-time basis. On the other hand, it strengthens the information disclosure of the ABS products, facilitates to match the qualified investors with the appropriate financial products, analyzes the relevant information which could affect the products, decreases issuing costs and enhances product rating.