The Saudi Central Bank (SAMA) is consulting on new rules for supply chain finance, with the aim of establishing a clearer regulatory framework for supply chain finance providers, intermediaries and the digital platforms that support them.
The consultation has two stated objectives: to establish standards and procedures governing supply chain finance and its intermediation, and to contribute to the growth of the sector in Saudi Arabia. The proposed framework covers licensing, technical and organisational requirements, information security, financial-crime controls, activity and credit limits, supervision and compliance.
DigitalTrade4.EU supports the objective of creating a robust framework for a growing digital financing market. Its response focuses on a narrower implementation question that becomes increasingly important as financing processes rely on electronic invoices, platform data and automated information flows:
How can a financier or intermediary establish that the commercial information used in a financing decision is accurate, current and attributable to an appropriate source?
This question connects directly to several elements of SAMA’s draft, including fraud prevention, due diligence, platform information, record retention and operational continuity. DigitalTrade4.EU’s central recommendation is that verified commercial evidence should strengthen these controls without replacing the legal, credit and regulatory responsibilities of the institution making the financing decision.
What the draft rules would establish
SAMA’s proposal goes beyond licensing supply chain finance as a financial activity. It creates a framework for how supply chain finance providers and intermediaries would be expected to manage the risks associated with financing receivables through increasingly digital processes.
The draft explicitly addresses fraud controls for finance companies and intermediaries in Articles 14 and 22. Articles 16 and 24 address due diligence, including the validity of the underlying transaction, counterparty identity and authority, and relevant third-party rights. Articles 30–33 govern platform operation, technical integrity, the accuracy and currentness of information, confidentiality and record retention, while Article 37 deals with continuity and the restoration of platform operations.
The draft also contains prudential requirements. For example, it proposes minimum paid-up capital of SAR 30 million for a supply chain finance company and sets limits on outstanding financing and counterparty exposure.
SAMA identifies broader expected effects as well. The framework is intended to support deeper and broader financing options for small and medium-sized enterprises and to encourage innovation in working-capital finance, including greater digitalisation of financing and invoice-related processes.
This makes the reliability of commercial information an operational regulatory issue, rather than simply a technical one.
DigitalTrade4.EU recommendations
DigitalTrade4.EU proposes that implementation should focus on the quality, provenance and current state of the evidence used in financing decisions. In this context, commercially material information means information about an invoice or receivable that may affect whether or on what basis it is financed—for example its source, amount, status, version, material corrections, disputes or other relevant changes. An authoritative source is fact-specific: it may be a buyer ERP, invoice source, debtor, registry or another legally competent origin of the particular fact being verified. A buyer may therefore be authoritative for invoice acceptance without necessarily being authoritative for the existence of competing assignments or security interests. Against that background, DigitalTrade4.EU recommends the following:
- Connect SAMA’s information requirements to identifiable source evidence. For information relied upon in a financing decision, the institution should be able to identify an appropriate source and evidentiary basis, confirm that the information is accurate and current for the intended use, detect material changes and retain sufficient records to reconstruct the decision. This would provide an operational way of supporting Articles 31–33 without prescribing a particular technology or verification provider.
- Use layered checks to address duplicate financing. Articles 14 and 22 already address fraud risks, including repeated financing. DigitalTrade4.EU proposes treating duplicate financing as several related failure modes rather than a problem solved by a single invoice confirmation. An invoice may have been altered or falsely approved; the same receivable may be presented on separate platforms; or an earlier assignment or security interest may not be visible to a new financier. Source-based evidence can help detect some of these risks, but it must be combined, where relevant, with financing records, assignment or security checks, applicable registries, counterparty declarations and other independent evidence. This distinction is important. Buyer confirmation can establish a commercial fact such as acceptance of an invoice, but it does not by itself establish legal priority, the absence of an earlier assignment or the absence of prior financing.
- Make “current” mean more than time-stamped. Article 32 addresses the accuracy and currentness of platform information, while Article 33 addresses confidentiality and retention. DigitalTrade4.EU recommends that information used for a new financing decision should not be treated as current merely because it has a timestamp. The institution should also determine whether the relevant source status has since been corrected, superseded, disputed or withdrawn. Historical evidence should remain reconstructible for audit, but evidence that may no longer reflect the current state should be revalidated before it is relied upon again.
- Keep regulatory responsibility with the institution making or supporting the regulated decision. A verifier or technology provider can check provenance, identity, authority, record version or status. An evidence relay can transmit that information. Neither function by itself determines credit approval, legal priority or financing eligibility. The bank, licensed finance company or intermediary remains responsible for its applicable due-diligence and supervisory duties, while the classification of an external provider should depend on the services it actually performs rather than the label attached to the technology.
- Build on existing sources without making a new central infrastructure a prerequisite. For domestic transactions, DigitalTrade4.EU recommends using the relevant Saudi commercial-registration identifiers and, where applicable, tax and invoice identifiers from ZATCA-compliant e-invoicing records, checked against the appropriate domestic source. For cross-border or higher-risk workflows, an LEI may supplement those domestic identifiers, while vLEI credentials may provide additional information on organisational roles or mandates. These tools are supplementary: they do not validate an invoice, authenticate an API endpoint, establish legal priority or replace the financier’s own due diligence.
- Test operational resilience as a recovery of trustworthy information, not merely platform uptime. Article 37 requires alternative arrangements for restoring platform operations. DigitalTrade4.EU recommends testing concrete failure scenarios, including provider outages, corrupted or conflicting status information and revoked or superseded evidence. A recovered system should re-establish access to accurate and current information before new financing decisions resume. Platform availability alone does not demonstrate that the financing process has recovered safely.
- Use a limited comparative pilot before considering further standardisation. The proposed pilot would compare similar buyer-led and supplier-led receivables using existing direct-source API or internal-reporting workflows and, where permitted, reusable verified evidence. The comparison should use comparable transactions rather than assume that one approach performs better in advance.The pilot should measure source-to-verification and verification-to-credit-decision time; application-to-disbursement time and funded working-capital days; manual checks, duplicate-financing alerts, false acceptances and stale-state incidents; and total implementation, operating, provider-substitution and recovery costs. It should also measure the setup time, documentation, support needs and per-transaction effort faced by smaller suppliers. The purpose is to establish market readiness, risk effects and proportionality before any broader standardisation is considered.
From digital records to usable financing evidence
The central issue raised by the consultation is therefore not simply whether invoices and financing processes are digital. It is whether the information used to make a financing decision remains trustworthy at the point when the decision is made.
DigitalTrade4.EU’s proposal does not require a compulsory new platform, a universal receivables register or an additional reporting regime. Instead, it provides an optional implementation approach for requirements that SAMA’s draft already addresses: fraud prevention, due diligence, information accuracy, record retention and operational continuity.
The practical principle is straightforward: use evidence from an appropriate source, verify the state that matters for the transaction, record material changes, perform separate checks where legal rights or previous financing are relevant, and keep the final responsibility with the regulated institution.
A focused pilot would allow SAMA and market participants to test whether that approach improves decision-making in practice, what residual risks remain and what the full implementation burden would be—particularly for smaller suppliers—before moving toward any wider standardisation.
Summary by DigitalTrade4.EU