Supply chain finance plays in optimizing the available resources, here are some points you need to know:
What are the benefits?
Supply chain finance, also known as reverse factoring, offers a cost-effective financial solution that simplifies this payment process. This allows the supplier to request prepayment of approved invoices before the payment date.
The provider can receive payment in advance from the lender by paying the financing fee, and the lender is paid by the borrower on the due date. To know more about the supply chain you can visit https://www.europeanfinancialreview.com/category/strategy-management/contract-and-commercial-risk-ma.
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Supply chain financing is very important in the supply chain management cycle because it optimizes cash flow at a preferential level.
It also allows for early payment, allows invoice discounts, takes advantage of a strong credit rating from buyers, and enhances relationships with suppliers.
Financing bills in supply chain financing
An alternative solution in the context of supply chain finance management to the short-term problem with the credit crunch is to discount accounts.
While suppliers want to receive payments as quickly as possible, buyers prefer longer credit periods. This is where financing invoices come in.
Financial institutions pay providers as soon as the right amount of margin, initial payment fees, and discounts have been deducted. The institution withholds costs and provides a longer loan period to the buyer. This offers a favorable situation for all involved.