Supply chain finance ("SCF") helps your suppliers with their working capital - and because your suppliers benefit, you can benefit too.
Suppliers get paid upfront, ideally as they ship
You get to pay later
One or more financiers bridges the timing gap
But doesn't it take a long time to set up SCF programs? Aren't they expensive and time consuming to operate, involving multi-year IT implementations and a lot of human intervention?
Why Consider SCF?
Immediate Supplier Payments: Suppliers are paid upfront, improving their liquidity and strengthening your supply chain.
Extended Payment Terms for Buyers: Align payments with your business's cash flow cycle, enhancing your working capital.
Zero-IT: The new breed of SCF platform is powered by supplier data so it can go live without requiring an IT project.
Accessible to All Sizes: Think SCF is only for the Fortune 500? Think again. Advances in technology and the increasing number of financiers in the market make SCF work for businesses of any size.
Am I too small for SCF?
We all know that size matters - especially in financial circles. But with the right technology and financial partners, SCF works even for quite small companies.
The number of financiers (including non-banks) is growing all the time
Newer platforms operate "over the top" of the accounting system powered by supplier data - meaning you can go live without an initial IT project
Finance-reach is expanding so that even smaller suppliers in emerging markets who ship infrequently can be included in programs
Projects can be implemented with positive ROI from day one
SCF for small companies: how do I start?
The best way to get started is to work with one of the new breed of platforms, like PrimaTrade.
PrimaTrade is one of the next generation of SCF platforms that can go live in your supply chain without an IT project. This is because it is powered by supplier data.
So you get to try it out and see how it works - it is just a matter of switching it on.
Introduce a few suppliers to Prima.
Suppliers upload and self-digitise their paperwork to provide the data needed for the SCF process.
You pay them early in exchange for a discount - and generate a P&L win from the very start.
If the experience is working for you, then add more suppliers and add a financier.
Adding a financier - is it difficult?
Once the financier gets involved, your cash is freed up and you can even extend your payment terms if you wish:
Your suppliers upload and self-digitise as usual.
Based on the data provided, you approve the invoice for early payment.
The financier pays the supplier upfront.
You pay the financier back later (30/60/90/120 days etc).
The platform coordinates the financier and does all the work. Prima can locate a financier for you, but most banks will provide SCF so this is a good place to start.
If you are still issuing letters of credit, please offer to pay your supplier at shipment instead! This can be easily done via a platform like ours and it saves a lot of time, money and complexity straightaway - an immediate win.
What are my downsides?
It is difficult to go wrong with SCF, provided you pick a newer platform that is powered by supplier data - so you can go live without IT pain:
Suppliers benefit from early payments; this helps their financial position and makes doing business with you much easier.
With a financier on board, you can even generate additional operating cash flow.
There are no material costs or big IT projects as the platform is powered by supplier data so it works on top of any accounting system(s)
And, if supplier discounts for early payment are more than the financier's charges - you make a profit.
Can I talk to PrimaTrade's clients?
Our clients include smaller companies, just like you.
We have found them trade financiers, organised the process and got them live without IT projects.
Their programs have scaled to reach all their suppliers, and the typical saving is 1% on their spend - that's $100,000 saving for every $10m they spend with their suppliers.
We are normally live with the first transactions inside a week.
Get in touch with us and we will organise a call for you with a client of ours - and you can hear first hand what it is like to work with us as your SCF partner.
Click on this link to get in touch: CLICK HERE.