What is Supply Chain Finance? Process, Types, Benefits, and More Explained

DELHI, India - Nov. 18, 2024 - PRLog -- Businesses in India, especially the Small and Medium ones (SMEs), face several cashflow challenges that can significantly affect their production, distribution and growth operations. Think of a small manufacturer struggling to meet payroll because a large retail client delayed their payments for months together. This delay leads to a major financial strain, affecting their capacity to buy raw materials, provide salaries and service new orders. This scenario is common across industries.

Supply Chain Finance (SCF) is one such way to address cashflow problems.
Through SCF, this manufacturer can now get immediate payment for their goods from a registered financial institution, while their larger retail buyer continues to withhold payment.

What is Supply Chain Financing?

BCR Publishing's World Supply Chain Report 2023 mentions that, year-on-year, global SCF volumes have risen by 21% to US$2,184bn and funds in use are up by 20% to US$858bn. SCF is a smart way to improve business cash flow by adjusting payment terms between buyers and suppliers. As a result, both parties benefit - while the suppliers get paid faster, the buyers enjoy extended credit periods. SCF not only improves your cash flow but also safeguards the supply network during market fluctuations. SCF involves buyers, suppliers and financial institutions, working together to establish a short-term credit based on the buyer's creditworthiness.

Consider this scenario: You purchase goods from a supplier. Instead of you, a financial institution pays the supplier, often for a small fee, which you later repay based on agreed terms.

How CredAcc empowers Banks & NBFCs with next-gen SCF Solutions

Supply chain finance (https://www.credacc.com/supply-chain-finance) is more than just a financial tool. It is a strategic lever essential for all businesses (SMEs or large enterprises) gearing towards improving their finances and strengthening their supply chain partnerships.  CredAcc's highly configurable and user-friendly Supply Chain Finance Loan Origination System (LOS) and Loan Management System (LMS) empower financial institutions to deliver fast, reliable, comprehensive and cost-effective SCF solutions.