Clarifying the Purpose of Supply Chain Financing: A Response to ‘On what is being funded’

• We agree with Professor Gelsomino (2024) that supply chain financing (SCF) literature has been too tactical and limited in focus. • Profit and cash flow are results of the business , and they are captured in the company’s financials. The intertwined nature of these concepts is more than just a choice a firm makes. • Although cash flow is central to firm survival and strategic flexibility, it has received surprisingly limited theoretical attention in the supply chain management literature. This focus reflects a structural separation between SCM and corporate finance. • Maintaining positive cash flow before profitability arrives can be enabled by utilizing innovative SCF techniques. • The embedded nature of supply chain capital makes transactional arrangements, rather than financing contracts, the primary mechanism through which liquidity is created, shifted, and allocated within and across firms. • SCF involves both funding the organization through the supply chain and funding the supply chain through the organization ( Leuschner, et al., 2023 ). • Using the organization to fund the supply chain generates strategic benefits that extend beyond short-term liquidity support to suppliers and customers and can be explained through multiple organizational theories. • The goal of supply chain management is to optimize the financial flow of a focal company, and the means to this is to adopt a SCF orientation.