Aurora Capital Australia
Introduction
Supply chain finance, also known as supplier finance or reverse factoring, is an increasingly common funding solution that helps a business unlock working capital to improve cash flow.
As a concept, supply chain finance refers to a buyer approving a supplier’s invoice for financing from a third-party intermediary financier, meaning that the supplier gets paid more quickly than they would otherwise. It enables buyers to extend payment terms and retain more working capital to help the business grow.
Unlike other receivables finance techniques like factoring, supply chain finance is set up by the buyer instead of by the supplier. Facilitating transactions between buyers and sellers (suppliers), supply chain finance can also stabilise the supply chain.
PROTECTING YOUR SUPPLY CHAIN
The supply chain is one of your company’s most strategic business assets and, it makes sense to look after it, managing stability and reducing risk around it.
When supply chain finance is at the heart of a working capital strategy, parties can collaborate on programs that meet each other’s liquidity objectives and take control of their own cash flow. The relationship is strengthened, and together both buyers and their suppliers can fuel growth stability for a successful future.
A well-constructed supply chain finance program is mutually beneficial in helping buyers free up cash and allowing suppliers to get paid earlier.
The supply chain finance process is simple and, at its core, works by getting everyone’s cash in the right place at the right time.
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