Supply Chain Finance.

 

Business is continually challenged to optimise cash flow management and improve supply chain efficiencies - both elements critical to gaining and maintaining competitive advantage. Supply Chain Funding (or SCF) is rapidly emerging as the main contender with increasing numbers of global businesses and institutions embracing SCF as a wide-ranging and impactful solution. 

The Exchange Trust SPI provides a powerful Straight Through Processing solution for Financiers, Suppliers and Buyers. read more about supply chain finance …..

Supply Chain Finance (sometimes referred to as “reverse factoring”) is a simple process beginning with the supplier sending an invoice to the buyer. The buyer approves the invoice and uploads it to the SCF platform, thereby creating an irrevocable payment obligation. 

The supplier is now able to sell the invoice to the financier at an attractive rate, based primarily on the buyer risk. The payables financing transaction is designed to be a “true sale” where the risk is transferred from the supplier to the financier. For example, in a supply chain with 75-day terms, it is possible for the supplier to receive payment on day 5, at a low cost, while the buyer, thanks to supply chain financing, is able to pay the financier on day 75.

It can also be structured to extend the buyers payment terms to the supplier, resulting in optimised working capital for the buyer and enhanced cash-flow for the supplier, while minimising risk throughout the supply chain. 

Supply Chain Finance is not a loan, it is an extension of the buyers’ accounts payable and is not considered financial debt ….and for the suppliers it represents a true sale of their receivables. 

SCF is currently extensively used in the US and European economies comprising approx. 10% of all trade transactions and expecting to climb to 15% by 2015. 

Using the Exchange Trust SPI SCF Solutions can be deployed across the developing continent of Africa to stimulate and support trade with suppliers in African countries.