A full spectrum supplier finance program can be comprised of a selection of, or all of, the following programs: supply chain finance, factoring, and dynamic discounting. While these programs offer a variety of options for supply chain financing, they come with limitations:
Supply Chain Finance (SCF): Bank funded early payments based on buyer’s credit worthiness. Works mainly for largest suppliers (top 30-50) because onboarding the long-tail suppliers isn’t economical for banks. The benefit for buyers lies in the extension of payment terms, but this puts the long-tail suppliers, not eligible for SCF, at risk.
Factoring: Supplier initiated receivables financing, based on the supplier’s credit worthiness, often comes with incredibly high interest rates. Often, when buyer’s implement a SCF program and extend payment terms, suppliers faced with cash flow needs, are forced to resort to factoring their receivables.
Dynamic Discounting: Buyer offers early payment as soon as invoice is approved. While beneficial for deploying excess cash to drive P/L benefits, it does come with a Days Payable Outstanding (DPO) impact and may not target large spend.
While these financing options all fit a certain segment of your supply chain, you still might be excluding some suppliers from any of these programs--threatening the overall health of your supply chain. In the new day and age of the Ethical Supply Chain, with so many options available, you can’t afford not to offer affordable financing to all your suppliers. Everyday you pay your suppliers late impacts their business, the economy, and ultimately job growth. Investing in the supply chain is just the right thing to do.
While Dynamic Discounting has the potential to fund your entire supply chain, what if you don’t want to use your own cash?
That’s where Supply Chain Finance 2.0 comes in. Experts Dave Skirzenski, Managing Director at Greensill Capital and Daniel Pfeiffer, Senior Director of Working Capital at Taulia, will discuss the current state, and the future of supplier financing.
In this upcoming webinar, they’ll go over:
What a modern-day supplier finance program looks like
How to tell which financing option is right for which supplier segment
Tips and tricks for flawless implementation and achieving the highest ROI
Date: Thursday, August 21
Time: 11:00am PDT / 2:00pm EDT
Duration: 1 hour