Your business provides clients with a manufactured product. You have long lead times in the production and distribution (Supply Chain). You need Supply Chain Financing.
What is Supply Chain Finance?
Supply chain finance is a set of solutions for businesses to improve cash flow for lengthening business payment terms to their suppliers. A Supply Chain Finance process involves the buyer, the seller, and the financing company. Supply Chain Financing helps large and SME suppliers to receive payment earlier.
The evolution of your product starts with the making of its parts to the assembling. It then finishes with transportation to your customer’s warehouse. All stages in-between are commonly referred to as your supply chain. If the supply chain is not efficient, it can increase production costs causing costly lags from wasted time and resources. Also, your working capital needs can be exacerbated. In this situation, a Supply Chain Financing Company like WIP Funding can offer you the best solution.
This inefficiency can be dispelled as a Supply Chain Financing (SCF), also called Reverse Invoice Factoring. The goal of Supply Chain Financing is to allow your business to maximize affordable liquidity. Also, Supply chain finance helps to improve your working capital. Supply Chain Financing allows your business to streamline invoices and payment processes. The plan gives organizations the ability to extend payment terms- or for suppliers- to get the payment earlier.
How Supply Chain Finance Works?
For a small or medium-sized supplier, the need to organize the supply chain is great. Supply chain financing allows organizations to get better pricing and availability of the products. Extra funding occurs when suppliers’ customers sell their invoices to a lending company. Also, when customers make payments to that company, giving the supplier the much-needed cash. The lending company may take a small fee out of the invoice as they loan money to the supplier. This will only affect the amount the supplier receives as the paying business pays the full amount of the invoice.
How does Supply Chain Financing work for SME?
For SME, Supply Chain Financing allows suppliers to receive financing efficiently and at less cost. Supply Chain Financing allows the paying business to obtain better pricing from the suppliers and less stringent payment terms. Thus, the supplier receives the extra cash as is needed, while providing additional security. Additionally, the buying businesses receive their products at an acceptable time at a lower cost.
Supply Chain Financing will allow your business to save money. Also, essentially disentangle the extra cash trapped in the sludge of inefficiency, at no extra cost to your buying business. Instead, all cost is centered on the supplier, the party receiving the benefits of cash flow.