Supply Chain Finance

Supply chain finance helps businesses manage the gap between paying their suppliers and receiving payment from their customers. For businesses that hold stock, manufacture goods, or operate on extended payment cycles, this gap can be a significant constraint on growth.

It is also one of the most underused tools available to SMEs many businesses that would benefit from it are not aware it exists, or assume it is only relevant at a larger scale. It is not.

• Funding the purchase of stock or raw materials
• Extending payment terms with suppliers without straining cash flow
• Supporting a business that is growing faster than its working capital allows
• Enabling businesses to take advantage of bulk purchase discounts they could not otherwise afford
• Reducing reliance on overdrafts for stock funding

In its most common form, a supply chain finance facility allows a business to have its supplier paid early by the finance provider while the business repays the facility on extended terms. This improves cash flow for both parties and can strengthen supplier relationships.

It can also take the form of a stock finance facility, where the lender advances against confirmed purchase orders or stock in transit.

Supply chain finance facilities need to be matched to the actual purchasing cycle and cash conversion cycle of the business. A facility that does not reflect how the business actually buys and sells can create as many problems as it solves.

We also see businesses using expensive overdrafts or short-term loans to fund stock purchases when a dedicated supply chain finance facility would be cheaper and more appropriate. If your stock is eating your cash flow, it is worth understanding what the alternatives look like.

We work with specialist supply chain and trade finance providers alongside mainstream banks. We will assess your purchasing model, your supplier relationships, and your cash conversion cycle before identifying the right structure.

Supply chain finance is available from relatively modest facility sizes, this is not exclusively a large corporate product.

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