Supply Chain Finance is a set of financial solutions that optimize cash flow by allowing suppliers to receive early payment while buyers extend their payment terms.
How It Works:
- A buyer approves supplier invoices.
- A financing institution pays the supplier early.
- The buyer pays the financier at a later date.
- The cycle improves working capital for both parties.
Benefits:
- Improves liquidity across the supply chain ecosystem
- Strengthens supplier relationships through timely payments
- Extends payable cycles for buyers without impacting suppliers
- Enhances overall supply chain resilience and efficiency
Example:
A supplier receives early payment from a financier while the buyer settles the amount after an extended credit period.