Understanding Supply Chain Finance
In today’s globalized economy , businesses continuously strive to optimize their financial operations. One pivotal area of focus is supply chain finance (SCF). Understanding the intricacies of supply chain finance can lead to enhanced cash flow, reduced costs, and stronger supplier relationships. What is Supply Chain Finance? Supply chain finance , also known as supplier finance or reverse factoring , is a set of solutions that optimize cash flow by allowing businesses to extend payment terms to their suppliers while enabling suppliers to get paid earlier. This is facilitated through a financial intermediary, typically a bank or a specialized SCF platform. How Does Supply Chain Finance Work? Purchase Order and Invoice Issuance : The buyer issues a purchase order to the supplier. Upon delivery of goods or services, the supplier sends an invoice to the buyer. Invoice Approval : The buyer approves the invoice and confirms its validity to the financial...