Supply Chain Finance | 2021 Supply Chain Finance (SCF) Guide

An introduction to Supply Chain Finance (SCF) / Payables Finance

Trade Finance Global / Supply Chain Finance | 2021 Supply Chain Finance (SCF) Guide

Supply Chain Finance (Payables)

Welcome to the TFG Supply Chain Finance (SCF) and Payables Finance hub. Find out about how we help corporates and large businesses access supply chain finance programmes, or keep up to date with the latest research, information and insights on supply chain finance.

What is Supply Chain Finance?

Supply Chain Finance (also known as SCF, payables, reverse factoring and supplier finance), is a cash flow solution which helps businesses free up working capital trapped in global supply chains. Supply Chain Finance has recently been defined as a much broader category of trade financing, encompassing all the financing opportunities across a supply chain. Notwithstanding, the product is still very much seen from a narrower perspective, where its key feature is that it is buyer/debtor driven. In such a case, a buyer approaches its financial provider for the establishment of a receivables discounting line for its suppliers to use and discount the invoices they issued to that buyer.

It is a solution designed to benefit both suppliers and buyers; suppliers get paid early and buyers can extend their payment terms. This solution allows businesses which import goods to unlock working capital as well as reduce the risk associated with buying goods in bulk and/or transporting them globally. SCF is generally defined as ‘an arrangement whereby a buyer agrees to approve his suppliers’ invoices for financing by a bank or other financier’.

The term Supply Chain Finance (SCF) is often also referred to as

Given that there are no ICC rules for SCF (like there are for Letter of Credit or Incoterms), it’s often up to each provider to decide what they call it.

Despite the publishing of the ‘Standard Definitions for Techniques of Supply Chain Finance‘ by the International Chamber of Commerce in 2016, the definition is not yet widely adopted and providers of SCF often use various terms to describe their product offerings.

Receivables finance on the other hand, is well defined as ‘the purchasing of receivables or invoices from a seller, with or without recourse’.

In order to address some of the common issues and misunderstandings around SCF, we have put together this short guide.

Diagram: How does Supply Chain Finance work?

How can Supply Chain Finance benefit my business?

SCF is a very efficient way to underpin the stability of a Buyer’s supply chain and market reach vis-a-vis its suppliers, allowing it to benefit from better credit terms and streamlined invoice payment procedures (supply chain finance tends to be made available through online platforms). It is also very beneficial to suppliers, as it allows them to shorten their receivables cycle and therefore reinvest their operational cash-flow at a faster pace. The advantages also tend to include financing in better terms for both parties, as suppliers don’t need to take out financing under their own credit lines and may benefit from their clients’ access to credit at lower rates, and buyers may get credit from their suppliers at a lower cost than that of taking out a loan.

Benefits to buyers/ importers

  • Buyers can maintain a healthy balance sheet
  • Buyers maintain a good relationship with suppliers
  • Promotes competition/ diversity in suppliers
  • Allows buyers to make purchases in bulk to save costs
  • Buyers can work with complex end-to-end supply chains
  • SCF doesn’t disturb existing bank relationships or overdrafts

Benefits to suppliers/ exporters

  • Suppliers can get paid earlier than their usual 30-day credit terms
  • Little financial risk – insurance is sorted through a supply chain financier
  • Doesn’t cost the supplier any extra
  • Allows supplier to have the cashflow to work on numerous deals simultaneously
  • Helps provide liquidity and reduces financing costs

How can we help?

The TFG supply chain finance team works with the key decision-makers at 270+ banks, funds and alternative lenders globally, assisting companies in accessing trade & supply chain finance.

Our international team are here to help you scale up to take advantage of trade opportunities. We have product specialists, from machinery experts to soybean gurus.

Often the financing solution that is required can be complicated, and our job is to help you find the appropriate trade finance solutions for your business.

Read more about Trade Finance Global and our global team.

.

Get started – talk to our team

Contact Information

If you have a supply chain finance enquiry, please use the contact form.

Otherwise, you can reach us on the email addresses below.

Trade Finance Global
201 Haverstock Hill
Second Floor
London
NW3 4QG

Telephone: +44 (0) 2071181027

Supply Chain Finance Enquiries



.

Want to learn more about Supply Chain Finance?

Look no further. We’ve put together our feature trade finance insights, research and articles, and you can catch the latest thought leadership from the TFG, listen to podcasts and digest the latest in international trade right here.

From the Editor – Supply Chain and Payables Finance Insights

Building bridges and blockchains: A Roundup of GTR MENA 2021 Virtual All the insights from the first day of the biggest trade finance event in the MENA region.
The top five geopolitical risks for 2021 2021 opens in the middle of the greatest crisis of our lifetime. What does this mean in terms of risk for global value chains?
Vaccine supply chains in emerging market: the challenges From customs chaos to “fill and finish” just how resilient is the COVID-19 vaccine supply chain?

Videos – Supply Chain Finance

Supply Chain Finance Podcasts




Supply Chain Finance – Frequently Asked Questions

Who can use Supply Chain Finance?

Currently, supply chain finance programmes exist predominantly in Western European and US markets, but Asian markets are quickly following suite, particularly India and China. Chief Financial Officers are beginning to include supply chain finance as part of their working capital and treasury agendas. Despite being around for over 70 years, supply chain finance is now being transformed by digital innovation. Proprietary software and technology platforms work with banks to automate and provide instant rates and terms which suit both parties. Payables data will typically get uploaded to a supplier platform and suppliers can immediately approve invoices and see invoices before they mature.

Supply chain finance is great for large corporations or SME suppliers/ buyers. Whether you’re looking to import automotives and vehicles or retail stock such as clothing, supply chain finance is an innovative solution which the UK government fully supports and encourages.

How can Trade Finance Global help your business access supply chain finance?

At Trade Finance Global, we are experts in providing insight on global supply chain and trade finance. In addition, we have a network of expert funders and advisors who have helped SMEs and businesses access finance to import and export goods or services worldwide. We work with you to find out what your business requires.

Our specialists work with leading funders and banks to offer you the most competitive rates; simply get in touch using the contact form below, and briefly let us know what you’re looking for. Alternatively, find out more about supply chain finance by reading some of the articles we have put together above.

How does Supply Chain Finance work?
  1. A Supply Chain Finance facility is entered by the buyer, financier and supplier
  2. Goods are shipped and sales invoice is raised on the buyer by the supplier
  3. Supplier submits invoice to financier’s supply chain finance platform
  4. Buyer approves the invoice on the financier’s supply chain finance platform
  5. The financier pays the supplier, excluding interest and fees.
  6. The financier debits the account of the buyer on the maturity of the invoice

Strategic Partners:

Get in touch with our SCF team



Download our free SCF guide



Latest News

15Feb

Building bridges and blockchains: A Roundup of GTR MENA 2021 Virtual

0 Comments
All the insights from the first day of the biggest trade finance event in the MENA region. ... Read More →
11Feb

Document examination and conflicts of data

0 Comments
Documentation can be the source of trouble for many buyers and sellers. Here's how to avoid conflict and disputes when... Read More →
04Feb

The top five geopolitical risks for 2021

0 Comments
2021 opens in the middle of the greatest crisis of our lifetime. What does this mean in terms of risk... Read More →
04Feb

Vaccine supply chains in emerging market: the challenges

0 Comments
From customs chaos to "fill and finish" just how resilient is the COVID-19 vaccine supply chain? ... Read More →
28Jan

Breaking: Corporate Payment Undertaking (CPU) defined by GSCFF

0 Comments
GSCFF updated its Standard Definitions for the Corporate Payment Undertaking (CPU), Dynamic Discounting (DD) and Bank Payment Undertaking (BPU).... Read More →
27Jan

Bank vs Fintech? ESG considerations when selecting an SCF Programme

0 Comments
Payables finance is changing, often driven by the demands of corporates, looking for inclusive and sustainable programmes when considering who... Read More →
26Jan

BCR’s Supply Chain Finance Summit – A roundup of Day 1

0 Comments
The two-day BCR Publishing Supply Chain Finance Summit got underway this morning, boasting important names from the supply chain finance... Read More →
13Jan

VIDEO: IFC – The trade finance gap is set to double. Now what?

0 Comments
TFG’s Mark Abrams spoke to IFC’s Qamar Saleem, about the role of DFIs in assisting MSMEs in the short and... Read More →
11Dec

Report: After Covid-19 disruption, hedging supply chain risks is a top priority; less than 15% of companies consider reshoring production

0 Comments
Covid-19 lockdowns have disrupted global supply chains across the board and placed the concepts of reshoring and resilience on every... Read More →
27Nov

Supply Chain 4.0 – What is next for digital solutions in Agritech?

0 Comments
Islamic Development Bank and International Islamic Trade Finance Corporation Discuss Agritech Digital Solutions in 2nd Agritech Webinar... Read More →
26Nov

VIDEO: Reuters Events – Overcoming the barriers to the digitization of commodity trade

0 Comments
In partnership with Reuters Events, TFG hears from Simon Collins, TradeCloud and Movsum Muslumzada, SOCAR Trading about the digitization of... Read More →
25Nov

Global Trade Virtual – TFG Partners with TXF’s latest festival of debate in international trade

0 Comments
TFG is proud to be partnering with TXF for their latest event: TXF Global Trade Virtual 2020, which will be... Read More →
24Nov

VIDEO: Talking Heads of Trade: BNP Paribas on the ‘now’ and ‘next’ – Jean-François Denis

0 Comments
In partnership with BAFT, TFG hears from Jean-François Denis, Global Head, Trade Solutions, BNP Paribas, about how the bank has... Read More →
12Nov

Podcast: Multilateral Perspective – A Roadmap for Sustainable Trade Finance

0 Comments
We take a look at the role of multilaterals and public-private partnerships can help the trade finance community achieve sustainability... Read More →
10Nov

Global Supply Chain Finance Forum issues payables finance guidance to drive further clarity on terms and techniques

0 Comments
Global Supply Chain Finance Forum issues payables finance guidance to drive further clarity on terms and techniques... Read More →
10Nov

VIDEO: Spotlight On – Agribusiness – Key developments in commodity markets (agri and softs)

0 Comments
TFG spoke to an expert group of global commodity traders to look at the key developments in commodity markets over... Read More →
02Nov

Launched: Updated Periodic Table of DLT Projects in Trade

0 Comments
Distributed Ledger Technology (DLT), colloquially termed ‘blockchain’ has been touted to disrupt trade and supply chain, as well it’s financing,... Read More →
02Nov

Who’s Who? 7 initiatives in shipping, freight and supply chain using DLT & blockchain

0 Comments
Freight forwarding, shipping and logistics are undergoing a digital makeover. Connecting the dots, enabling traceability and increasing transparency between parties... Read More →
30Oct

#RemoteButConnected – TFG and TXF Partner for Global Commodities 2020 Virtual [Part 2]

0 Comments
As part of a wider strategic partnership with TXF, TFG are delighted to announce that we are supporting TXF Global... Read More →
28Oct

SME Trade Finance Guide

0 Comments
The guide is aimed at Small and Medium sized Enterprises (SMEs) which are importing or exporting, both overseas and domestically.... Read More →
27Oct

Will we ever bring SME Trade and Supply Chain Financing into the 21st century?

0 Comments
Why are the technologies we use to promote cross border trade so SME unfriendly? TFG heard from Matthew Gamser, CEO,... Read More →
26Oct

Contour partners with CargoX to transform bills of lading

0 Comments
Contour has, today, announced its partnership with CargoX, a blockchain platform for transferring documents and data including a certified electronic... Read More →
15Oct

Podcast: FCI – Views from the Board, Factoring and Receivables

0 Comments
TFG’s Deepesh Patel caught up with FCI’s Chairman, Mr. Patrick de Villepin, and FCI Vice Chairman, Mrs. Daniela Bonzanini, on... Read More →
15Oct

1.5°C Supply Chain Leaders: Why are small businesses key to success on climate?

0 Comments
How can SME Climate Hub create an ecosystem to enable SMEs to leverage climate action as a powerful means of... Read More →
14Oct

Q&A with Simon Paris, CEO Finastra and World Trade Board

0 Comments
This is not the time to be imposing trade sanctions, it is the time to be lifting trade restrictions and... Read More →
09Oct

How the Covid-19 shipping slump is disrupting UK’s Ecommerce sector

0 Comments
As the resurgence of Covid-19 threatens public health, virtual shopping poses a lower health risk which is likely to appeal... Read More →
07Oct

UK Export Finance boosts trade support in over 100 countries

0 Comments
As part of the UK Government’s ambition to boost trade globally, UK Export Finance (UKEF) can now provide increased financial... Read More →
02Oct

Podcast: Building resilience in treasury: leadership, supply chains and cash flow

0 Comments
TFG's Deepesh Patel heard from Caroline Stockmann, Chief Executive, Association of Corporate Treasurers on lessons learned from the Covid-19 pandemic... Read More →
01Oct

VIDEO: Natixis Chief Economist Insights – How well are Asian markets faring?

0 Comments
Covid-19 pandemic, the rise of techno-nationalism, US-China trade war, and Singapore string of frauds - just how well are the... Read More →
29Sep

Podcast: Does Free Trade really work? The Good, Bad and Ugly of Trade

0 Comments
Today we’re joined by UKTPO's L. Alan Winters, talking about the power of good trade policy, how trade negotiations are... Read More →

Back to Top