Supply Chain Finance(SCF): Bigger, Better, Faster

C&D Emerging Energy is a global supply chain operator in the sourcing, transportation, storage, trading and distribution of commodities and advanced materials for sustainable industries. We ’ve worked with partners in over 170 countries and regions to create value across the supply chain, and have delivered SCF implementation across all major markets globally.

WHAT IS SCF?

Supply chain finance (SCF) is a term describing a set of technology-based solutions that aim to lower financing costs and improve business efficiency for Buyers and Sellers linked in a sales transaction. It is typically applied to open account trade where the goods are shipped and delivered before payment is due. The goods, together with all the necessary documents, are shipped directly to the Buyer who has agreed to pay the invoice on a specified date. This option is obviously the most advantageous for the Buyer in terms of cash flow and cost.

Supply Chain Finance Process

Ø Buyer purchases goods or services from the Supplier

Ø Supplier issues their invoice to the Buyer, with payment due within a certain number of days (e.g., 30 days, 60 days, or 90 days)

Ø Buyer approves the invoice for payment

Ø Supplier requests early payment on the invoice

Ø SCF Platform sends payment to the Supplier, with a small fee deducted

Ø Buyer pays the SCF Platform on the invoice due date

WHY SCF?

The current economic climate is forcing many companies to better manage liquidity. Supply chain finance can be an attractive way for companies to improve their working capital position.

Benefits

The key idea behind supply chain finance is to provide suppliers with access to advantageous financing facilities by leveraging the Buyer’s stronger credit rating.