Supply Chain Finance (SCF) also known as Supplier Finance or Reverse Factoring is a working capital solution that allows buyers to extend favourable payment terms to their suppliers while also enjoying a longer credit period. With SCF the buyer can submit his outstanding invoices to a financial institution who then makes the payment to the supplier on his behalf. Supply Chain Finance helps in optimizing working capital and improving liquidity for both buyers and suppliers. The buyer doesn’t have to pay cash as soon as he receives the invoice and gets to prolong the credit period & the supplier gets paid early resulting in additional cash flow for both the parties. Global Trade is one such avenue where working capital efficiency can be marginally improved by releasing cash flow stuck in supply chains that stretch across buyers and suppliers from a diverse set of countries. Any buyer or supplier engaged in International Trade should explore the benefits of Supply Chain Finance for growing their business.
It has been an age old problem in International Trade, that the supplier wants to get paid as soon as he ships the goods while the buyer prefers a longer credit period to ensure safety at his end of the transaction. Supply Chain Finance can help both buyers and suppliers in growing their International Trade business by bridging this gap. With SCF, the buyers can pay their suppliers early and get access to the credit period they need to better manage their working capital.
Buyers & Suppliers
We were able to accept more orders from existing customers and also started working with some of the popular retail chains. This meant that we had to keep our cash flow healthier than ever to fulfil this increase in demand. It's a nice problem to have as a growing business and it helps when you have a partner like Drip.
Using our bank lines to pay suppliers while cargo is still on water didn't fit very well with our working capital cycle, and we wish we would've known about Drip earlier. They have been really supportive in our growth and are helping us scale faster through both inventory and supply chain finance.
Drip's credit line and financing process is transparent and works perfectly with our current bank. Thanks to them we are now able to purchase best quality products from reputed suppliers at attractive prices by paying upon shipment. I can now say that we're maximising our cash-conversion cycle in true sense.