Supply Chain Financing

What is the meaning of supply chain financing?

Supply chain financing is a set of financial solutions that aim to improve efficiency and optimise the cash flow for businesses that are involved in a supply chain. There are two main solutions related to supply chain financing: buyer financing and supplier financing.

• Buyer Financing: An anchor supplier offers early payment to buyers at a discounted rate. This helps buyers improve their cash flow and manage working capital more effectively.

• Supplier Financing: An anchor buyer extends its payment terms to suppliers, allowing them to receive early payment at a discounted rate. This helps suppliers improve their cash flow and reduce the risk of late payments.

In both cases, a financial institution or platform that offers supply chain financing acts as an intermediary, facilitating the early payment and handling the associated fees. This allows both buyers and suppliers to benefit from improved cash flow and reduced risks, ultimately leading to a more efficient and stable supply chain.