What Exactly is Supply Chain Finance (SCF)?

Supply Chain Finance, also known as supplier/vendor finance or reverse factoring, is a method of optimizing cash flow by allowing companies to lengthen their invoice payment terms to their Suppliers while providing the option to Suppliers to get paid early in exchange for a small discount.

In this scenario, all parties win! The Client optimizes working capital by extending the trade payable cycle and the Supplier generates additional operating cash flow early. Thus, the financial risk of disrupting the supply chain is minimized.

Clients, Suppliers and Lenders

Supply Chain Finance unlocks cash flow that is blocked in the supply chain, improves efficiency and reduces financial risk. SCF allows Clients to extend payment terms to their Suppliers while giving the Supplier the option to receive cash flow early.

To operate effectively, supply chain finance requires an ecosystem that improves the velocity of working capital across supply chains. Below are the three main participants in the supply chain finance (SCF) ecosystem.

Typically, large companies and organizations that rely on many supplier-provided goods and services to deliver products to their customers.

Small- to mid-market companies that supply goods and services to Clients in a supply chain pipeline. Some Suppliers are larger so they may also operate as Clients, thereby having their own complex supply chains.

Bank and non-bank sources of investment capital that advance funds to cover the cost of approved Supplier invoices. That’s FTF Financial Group!

FTFs Client-Centric
Supply Chain Finance Model

FTFs Supplier-Centric
Supply Chain Finance Model

Supply Chain Finance Unlocks the Cash that’s Hidden Inside Your Supply Chain!

Increasing the time it takes to pay a Supplier improves several financial metrics and most importantly, frees up cash flow that would otherwise be trapped inside the supply chain pipeline.

Supply chain finance offers Suppliers a way to mitigate the effects of payment term extensions and to accelerate their own cash flow.

Supply Chain Finance Unlocks the Cash that’s Hidden Inside Your Supply Chain!

Increasing the time it takes to pay a Supplier improves several financial metrics and most importantly, frees up cash flow that would otherwise be trapped inside the supply chain pipeline.

Supply chain finance offers Suppliers a way to mitigate the effects of payment term extensions and to accelerate their own cash flow.