Supply Chain Finance is a tool that helps businesses improve their working capital and cash flow by accelerating payment to suppliers. It involves collaborating with financial institutions to provide early payment options to suppliers, allowing them to receive payment for their invoices sooner than the agreed-upon terms.
How does it work:
1. Collaboration- Buyers negotiate extended payment terms with suppliers to manage cash flow.
2. Financial Facilitator- Financial institutions step into access buyer’s creditworthiness and offer early payment options to suppliers.
3. Early Payment Options- Suppliers can sell their invoices at a discount, ensuring reliable cash flow and reducing short-term financing needs.
Key Stakeholders in Supply Chain
1. The Buyers
These are the companies that purchase goods or services from suppliers. They are the ones behind the financing program and often have a strong influence on the terms and conditions.
2. Suppliers
These are providers of goods and services to buyers. They agree to sell their invoices or receivables at a discount to access early payment. They benefit from improved cash flow and reduced credit risk.
3. Financial institutions
Facilitators accessing creditworthiness, managing payments, and providing early payment to suppliers. They benefit from the discounts offered by suppliers and the interest or fees charged for their services.
4. Tech providers
They enable efficient and secure transactions between the stakeholders. They develop and maintain platforms or software solutions that facilitate invoice validation, data management and payment processing.
5. Credit insurance companies
Provide insurance coverage to protect against the risk of non-payment by buyers. They provide credit insurance to suppliers, which can reduce risk and make it easier for them to access financing at favorable terms.
6. Auditors and consultants
These provide independent assessments and advice related to financial health and risk management of the supply chain.
What is Churpy’s Role in Supply Chain Finance:
1. Tech providers in securing transactions between the stakeholders and maintain platforms that facilitate invoice validation. With our up-to-date invoice reconciliation and ensure we automatically harmonize all your bank transactions into your ERP system in real-time where it acts as a one-stop shop for all vital transaction data.
2. Trade finance where we optimize working capital for the supply chain through our partnerships with banks. Follow this link to get to know how we can help you achieve success in Supply Chain Finance Churpy Products.