Supply Chain Finance Example

Supply chain finance definition.

Supply chain finance example.

Example of supply chain finance. Supply chain finance solutions can be implemented in various ways. A supply chain is the end to end system that creates products and services and delivers them to the customer. The generic supply chain begins with the sourcing and extraction of raw materials.

Supply chain finance also known as supplier finance or reverse factoring is a set of solutions that optimizes cash flow by allowing businesses to lengthen their payment terms to their suppliers while providing the option for their large and sme suppliers to get paid early. Presently associated with ge africa as a finance analyst on their finance leadership program with 3 4 yrs relevant experience. Unlike traditional factoring where a supplier wants to finance its receivables supply chain financing or reverse factoring is a financing method initiated by the ordering party the customer in order to help its suppliers to finance its receivables more easily and at a lower interest rate than what would normally be offered in 2011 the reverse factoring market was still very small. Let s say the buyer company abc purchases goods from the seller supplier xyz.

Let s look at two different examples of a supply chain. Supply chain financing is a general term used to describe a number of financial tools that can be used to improve payments between companies and their suppliers. A typical extended payables transaction works as follows. The following are illustrative examples of a supply chain.

Supply chain finance scf is a large and growing industry. In 2015 a mckinsey report suggested that scf had a potential global revenue pool of 20 billion while in 2017 china s supply chain finance sector was tipped to reach us 2 27 trillion by 2020. Ambitious goal driven finance analyst with expertise in financial management auditing financial planning analysis supply chain management and commercial finance. Goods can also flow in a reverse direction in a supply chain from the customer back to producers for purposes such as returns reuse and recycling.

Additionally a 2017 icc survey of banks in 98 different countries identified scf as the most important area for development and strategic. The raw materials are then taken by a logistics provider to a supplier which acts as the wholesaler.