HomeFWJ TakeawayBusiness fundingWhat is supply chain finance?

Our commercial finance experts commonly get asked “what is supply chain finance”?

We put it simply – supply chain finance is finance provided looking down the supply chain to the suppliers whereas factoring and invoice discounting for example look up the supply chain to a company’s customers and use these debts as security.

Furthermore, supply chain finance is a form of working capital finance and provides liquidity in a similar way to an overdraft. The main difference being that funds are only used to pay suppliers.

At present there are two types of supply chain finance in the market, our experts have provided the brief details below but can provide more assistance if you contact them.

  • supplier initiated (including reverse factoring) – supplier initiated supply chain finance allow suppliers to sign-up to a programme and request early payment on approved invoices before they are due. The supplier receives the early payment from the lender (less any fee payable) and the lender gets repaid by the borrower on the due date of the approved invoices; and
  • buyer initiated (sometimes called purchase finance or supplier finance) – buyer initiated supply chain finance involves the buyer instructing the financier to make payments directly to the supplier. These payments can be made early or on the due date. The fee is usually charged to the buyer who repays the lender on the agreed date (may be after the due date).

Whatever your supply chain finance enquiry – we can help.

Please contact one of our friendly experts for a consultation on supply chain finance. At Francis Wilks & Jones, we have a team of supply chain finance experts ready to take your call and help your queries in relation it supply chain finance and help your business to continue trading. Whatever your supply chain finance question, we can help you.

Contact us in confidence