Question

Briefly explain the significance of supplier financing siting the impact it has on US financing for companies.

Answer 1

Supply Chain Finance Services

There are a variety of trade finance techniques that companies have at their disposal to choose from to effectively address pain points within the supply chain. The health of a company's supply chain is not determined or measured solely based on annual revenue. How efficiently capital flows between buyers and suppliers is a defining determinant when measuring supply chain strength. For example, a common pain point small businesses experience in the supply chain is lengthy sales cycles and therefore slow-moving capital. This is generally restrictive in terms of growth and affecting the company’s bottom line.

Many growing companies are faced with financial hurdles that require an outside solution or remedy. Oftentimes, working capital can become stuck or trapped in elongated global supply chains. In the trade business of both exporting and importing goods and services, many organizations find themselves operating beyond internal means and thus in need of a cash injection or cash flow solution. Supply Chain Finance Solutions are created to alleviate both parties involved in the standard business of trade (i.e. the supplier and the buyer).

Supply Chain Financial Services employs business solutions like compensating the supplier prior to their production and sales execution to enable inventory security. The process involves suppliers selling their invoices to financial service providers - these are called factors. This expedites the time in which the supplier can access money they are owed. Such services ultimately mend gaps in the supply chain and accelerate the normally labor and time-intensive process.

Supply Chain Finance Providers help both small and large businesses to improve their working capital requirements as they pertain to their company supply chains, and thereby improves the company’s credibility among stakeholders and customers. As a result, Supplier Finance Programs alleviate supply chain pain points by streamlining the financial requirements inherent to the buying and selling processes, making them efficient and productive.

The supply chain finance ecosystem has changed dramatically. No longer are traditional banks the source for all things finance. Indeed, open-account financing has redefined the framework for company growth formulas and transformed the competitive landscape. Now, companies can access cash via online supply chain finance platforms. Supply Chain Finance Platform Providers help companies to eliminate pain points by enabling accelerated growth and sales expansion. Supply Chain Finance Systems enable companies to optimize payment terms and improve cash flow, creating a win-win solution.