Supply Chain Finance – An introduction

 

 

Businesses in today’s Covid economic climate are being required to better manage their liquidity and the strength of their balance sheet. Supplier financing, or supply chain finance is an appealing way for a business to improve it’s working capital position.

With Supply Chain Finance (SCF), suppliers are paid faster and extended terms are offered to the buyers, thanks to Fifo Capital’s innovative technology solutions.

Buyers submit their supplier invoices with Fifo Capital, and we make an immediate payment to the supplier. This approach of financing inventory or consumables offers benefits to both parties in the transaction – the buyer has a longer term to pay the invoices, and the supplier gets almost instant access to their receivables, allowing for stronger cash flow for both parties.

Suppliers and wholesalers are typically requesting payment within 30 days – with some suppliers offering discounts for early payment. The discount incentivises the buyer to make a faster payment, this faster payment benefits the supplier through faster access to their receivables and a stronger cash flow position.

Buyers are also benefited with supply chain finance thanks to an increase in leverage and capacity. Buyers can often negotiate beyond the standard early payment terms for even greater discounts on payment.

Conversely, due in part to the extended repayment terms offered by Fifo Capital, buyers could increase the size of their order and negotiate additional volume discounts without the burden of a weakened cash flow. In some cases, discounts can often well exceed the cost of the finance.

While there is a tangible benefit to supply chain finance on a company’s balance sheet, supply chain finance also solidifies relationships between buyers and suppliers and sures up supply chain stability.

To find out more about how Fifo Capital’s Supply Chain finance can help your business to take the next steps in growth and cash flow security, complete the form below for an obligation free discussion with our Business Finance team.

 

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