How does supply chain finance work?
- The supplier sends their invoices to the buyer using the current policy and methodology.
- The buyer approves the invoices and uploads the approved invoice data (its payables as well as any applicable payment offsets such as credit/debit memos) to the SCiSupplier platform.
- At any time, the supplier is able to log on the supply chain finance platform via web browser to see all the approved invoices. The supplier may do nothing and funds will settle directly in the supplier’s bank account on the original maturity date, or the supplier may sell or ‘trade’ his receivables to a funder on the SCiSupplier platform in return for advance payment.
- If traded before maturity, 100 percent of the invoice—less a small financing fee or discount—is transferred electronically to the supplier’s bank account. In most cases, the supplier is paid on the next business day. Since funds from the financial institution are advanced based on the buyer’s promise to pay on the original maturity date, financing rates are based only on the buyer’s risk, not the supplier’s. Therefore, financing rates are very attractive—about 10 times lower than factoring or other traditional financing solutions.
- At maturity, the buyer pays the full invoice amount to the supplier or respective funder on the SCiSupplier platform.
Both sides of the supply chain benefit from our strategic approach.
How much does supply chain finance cost?
The main benefit of supply chain finance is that the buyer does not pay any fee to extend its payment terms and the supplier only pays a small discount if they want to get paid early.
Who benefits from supply chain finance?
Supplier finance works for companies in a variety of sectors, including automotive, electronics, manufacturing, retail, and many others. It works for companies on both sides of the supply chain. Buying organizations can extend their payment terms, and suppliers can get paid earlier. Supply chain finance is a true win-win solution for both trading partners. The PrimeRevenue team works closely with buyers and suppliers to craft a supply chain finance plan that fits the evolving needs of both parties.Contact ustoday to find out how we can serve your needs.
