Supply Chain Finance

• Supply chain finance (or 'supplier finance') is a type of cash advance. Similar to invoicefinance, it's based on the credit rating of companies in the supply chain.

• It's a way for smaller businesses to benefit from the higher credit scores of their buyers and for buyers to lengthen their payment terms.

• Large multinational companiesare highly likely to honor invoicesfrom suppliers. That means the suppliers that work with them can get 100% of the value advanced from a lender, minus a small fee, once the buyer has approved the invoicefor payment — because, at this stage, the risk of non-paymentis low.

• Supply chain finance involvesa shared arrangement between Exporters and Importers engaged in international trade. Financial institutionsoffer it to enableboth parties to manage their invoicepayment terms, maintain liquidity and keep money flowing freely through their supply chains.

• The complete business process includes the procure-to-paycycle, working capital management, and the order-to-cash cycle. The overarching purpose of FSCM (Financial SupplyChain Management) is to achieve and maintain visibilityinto all of these activities so that your supply chain may be as efficient as possible while capitalizingon cost savings.