Achieving and maintaining steady and reliable cash flow is one of the most challenging aspects of running a business, positioning it for growth, and realising that growth potential. In particularly harsh cases, cash flow disruptions can result in missed growth opportunities, lost customers, product quality issues, and even the failure of your business. Worse, these disruptions don’t necessarily have to strike at your business directly to cause real damage.
Cash flow interruptions that affect any business in your supply chain can have serious adverse effects on you, their customer. While many tools exist to address cash flow issues within your own business, few business owners take serious steps to stabilise their supply chains. As recent research in Australia and elsewhere shows, a massive proportion of businesses even increase the risk of dangerous disruptions by paying supplier invoices late. Fifo Capital’s Supply Chain Finance aims to change that by giving customers the power to protect not only their own cash flow, but also that of their suppliers.
Empowering suppliers to stabilise your business
Supply Chain Finance is a tool that allows businesses to work with their suppliers to help stabilise their cash flow. Specifically, it allows suppliers to get early payments for specific invoices on demand in exchange for an early settlement discount. Those early payments are financed through a Fifo Capital credit fund, and paid off at a later date by the customer.
This allows the businesses you rely on to get access to the funds they need when they need them, without placing any additional financial strain on your business. Small business suppliers who are sometimes forced to wait weeks or months for desperately needed payments can use this to easily address cash flow shortages what would otherwise be a serious threat to their business. As a result, they’ll be able to provide more consistent and higher quality service to all their customers.
After experiencing the benefits for themselves, those suppliers may then well choose to use the service with their own suppliers as well, quickly spreading the practice along all the vulnerable links in your supply chain. The end result is a robust foundation that your business can rely on to support it as it grows and expands.
Improving your cash flow while supporting suppliers
What makes this such an attractive option for our customers isn’t just the end result of a more stable supply chain, it’s also in how the process works. Early payments are financed by Fifo Capital, but funding those payments doesn’t require any actual borrowing or security from the customer. Instead, we’ll set up a credit fund for your business, the size of which is determined by running a confidential check with our credit insurers.
Flexible investor funding with no recourse
The capital for that fund is supplied by our investors, and is insured instead of secured the way a loan would be. When a supplier needs a payment, they can nominate the discount size, and which invoices they’d like to have paid early, and receive the funds they need right away. Even better, they can opt for full or partial payment of an invoice, meaning they’ll never be forced to discount a larger amount than they need.
ROI on funds that clients never invested
The investors and the client business both share in the returns generated. Functionally, that makes Fifo Capital Supply Chain Finance the only finance solution that allows a business to generate returns on funds they didn’t invest.
Improved financial flexibility for clients as well as suppliers
Since payments are made from dedicated credit funds, clients also gain significantly more control over how and when they’ll make their own payments to settle the balance. That means more flexibility and more predictability in managing your own cash flow, even as you ease the cash flow issues of your suppliers.
The entire process is specifically designed to be clear-cut and transparent for all parties. Since the discount is determined by the supplier, and the process involves no borrowing, no security, no interest, and no hidden fees, clients and suppliers are both protected from any surprises. There are no complicated contracts or other paperwork, and all costs are clearly accounted for up front.
Supply Chain Finance is a valuable tool that’s designed to provide businesses with the power to better control their own cash flow, even as they empower and stabilise their suppliers. As a result, your business will be better able to weather cash flow interruptions and less likely to suffer supply issues, so you can focus on what really matters: innovation and growth.