- Buyer-Supplier Agreement: The buyer and supplier agree to participate in an SCF program facilitated by a financial institution.Shriram Finance
- Invoice Issuance: The supplier delivers goods or services and issues an invoice to the buyer.
- Early Payment Option: The supplier has the option to receive early payment from the financial institution at a discounted rate, based on the buyer's creditworthiness.Accounting Cafe+7Shriram Finance+7British Business Bank+7
- Repayment: The buyer repays the financial institution on the agreed-upon due date.
- Improved Liquidity: By extending payment terms, buyers can retain cash longer, enhancing their working capital. IIFL Finance+2Informa TechTarget+2Flexiloans+2
- Strengthened Supplier Relationships: Offering early payment options can improve trust and collaboration with suppliers. British Business Bank+2kredx.com+2Shriram Finance+2
- Reduced Risk: Ensuring suppliers are financially stable reduces the risk of supply chain disruptions. Vogue Business+3kredx.com+3IIFL Finance+3
- Faster Access to Funds: Suppliers can receive payments earlier than traditional terms, improving cash flow.
- Lower Financing Costs: Access to financing at rates based on the buyer's creditworthiness can be more cost-effective than traditional loans.
- Enhanced Financial Stability: Timely payments reduce financial stress and allow for better planning and growth. Shriram Finance
- Eligibility Criteria: SCF programs may require a minimum spend or a good credit history, potentially excluding some suppliers. Shriram Finance+2British Business Bank+2kredx.com+2
- Integration Costs: Implementing SCF solutions may require investment in technology and integration with existing systems. Shriram Finance+5British Business Bank+5Liquiditas+5
- Fee Structures: Suppliers may incur fees for early payment options, which could affect their decision to participate. Flexiloans+4Shriram Finance+4British Business Bank+4