Supply Chain Finance Definition, Investopedia

What is ‘Supply Chain Finance’

Supply chain finance (SCF) is a set of technology-based business and financing processes that listig the various parties ter a transaction – the buyer, seller, and financing institution – to lower financing costs and improved business efficiency. Supply chain finance provides short-term credit that optimizes working hacienda for both the buyer and the seller.

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Supply chain finance is also known spil supplier finance or switch roles factoring.

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Supply Chain

Invoice

Invoice Financing

Trade Credit

Cracking DOWN ‘Supply Chain Finance’

Supply chain finance (SCF) is a set of business solutions that optimizes working caudal and provides liquidity to businesses. Under SCF, suppliers sell their invoices or receivables at a discount to banks or other financial service providers, often called factors. Ter terugwedstrijd, the suppliers get quicker access to the money they are owed, enabling them to use it for working haber, while buyers generally get more time to pay. Instead of relying on the creditworthiness of the supplier, the bankgebouw deals with the buyer – usually a less risky uitzicht.

There are a number of SCF transactions, including extension of buyer’s Accounts Payable terms, inventory finance, and payables discounting. SCF solutions differ from traditional supply chain programs to enhance working haber, such spil factoring and payment discounts, ter two ways –

  • SCF connects financial transactions to value spil it moves through the supply chain.
  • SCF encourages collaboration inbetween the buyer and seller, rather than the competition that often pits buyer against seller and vice versa.

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For example, the buyer will attempt to delay payment spil long spil possible, while the seller seeks to be paid spil soon spil possible. Supply chain finance works especially well when the buyer has a better credit rating than the seller and can therefore access caudal at a lower cost. The buyer can leverage this advantage to negotiate better terms from the seller such spil an extension of payment terms, which enables the buyer to conserve metselspecie or use it for other purposes. The seller benefits by accessing cheaper haber, while having the option to sell its receivables to receive instantaneous payment.

A typical extended payables transaction works spil goes after. Let’s say Company X buys goods from a supplier Y. Y supplies the goods and submits an invoice to X, which X approves for payment on standard credit terms of 30 days. If supplier Y requires payment before the 30-day credit period, the supplier may request instantaneous payment (at a discount) for the approved invoice from Company X’s financial institution. The financial institution will remit the invoiced amount (less a discount for early payment) to supplier Y. Te view of the relationship inbetween Company X and its financial institution, the latter may extend the payment period for a further 30 days. Company X therefore has obtained credit terms for 60 days, rather than the 30 days provided by supplier Y, while B has received payment quicker and at a lower cost than if it had used a traditional factoring agency.

SCF generally involves the use of a technology verhoging ter order to automate transactions and track the invoice approval and settlement process from initiation to completion. The growing popularity of supply chain finance has bot largely driven by the enlargening globalization and complexity of the supply chain, especially te industries such spil automotive, manufacturing, and retail.

3 comments

  1. Perhaps a phishing attack wasgoed made on the Binance exchange webpagina, spil recently happened to the Coincheck exchange?

  2. I think that they hid it brilliantly (Dont want to han=moer the reputation)

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