The UK economy could receive a "vital" injection of liquidity by adopting a supply chain finance (SCF) model to help it through the recession, a procurement body has said.

The SCF, which theoretically enables suppliers to get paid earlier whilst buyers pay later, is designed to free up cash for both parties and stimulate growth in the economy, said the Procurement Intelligence Unit (PIU) said today (16 June).

The PIU said it is urging organisations in the private and public sectors to see SCF as a way of improving liquidity within the economy and helping suppliers, "a critical part of any organisation's ecosystem, to survive the current downturn".

The PIU, a procurement think tank, is part of the Procurement Leaders Network and is designed to help procurement directors in global 2000 companies.

"The last 12 months have been disastrous for the UK economy and we would urge the government, financial institutions and major industry players to sit down and discuss the merits of Supply Chain Finance as a pragmatic way of kick-starting the UK economy," said Mark Perera, CEO of the Procurement Intelligence Unit.

"The British government should give this model serious consideration and with its partial ownership of many major financial institutions, should actively encourage Supply Chain Finance as a way to start oiling the cogs of commerce. Furthermore, it is also the perfect way for banks to meet the Government directive of supporting small and medium-sized enterprises (SMEs) from a supplier perspective."