A look into supply chain finance

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A look into supply chain finance

Recently, supply chain finance has become a phrase that is common-place within the financial technology dialogue. It’s a bit different to many other ways of finance, in that it isn’t as simple as say a loan. However, it’s quite possibly one of the most powerful tools to increase the efficiency within a small or large business. Many consulted companies have looked into utilising supply chain finance as a way to increase their client’s efficiencies at every step of the supply-chain.

Supply Chain Finance is rather simple when you break it down into its core elements. It’s the movement of goods from the supplier to the buyer, financed by an external party. This finance creates a liability in the buyer’s account, which is typically paid off after the goods have been utilised or sold.

In more complex terms, it isn’t a loan/debt in conventional terms. It is an extension of the buyer’s Accounts Payable terms. It allows a buyer to leverage short-term credit, in order to ensure that there is enough working capital flowing through his business. In other words, it ensures that the funds that you can use to grow your business aren’t locked up in a delivery truck or your warehouse.

There is a lot of importance on freeing up cash that is trapped within a supply chain. It’s a delicate skill, but it can provide serious benefits to a business. For one, you’re able to have peace of mind when considering your transactions for that month. It is a lot nicer to know that you’ll be able to safely invest in new infrastructure or technology without risking procurement of your products.

There’s a misconception that supply-chain finance is only for large companies. This is incorrect. With the increases in financial technology, supply chain finance is becoming increasingly more available to small to medium enterprises. This can really improve the competitiveness of Australian businesses if they begin to utilise these tools. Having more cash-flow is arguably more important for a SME compared to a large organisations. One of the reasons why many businesses fail in the early days is a lack of cash-flow. By utilising supply chain finance, businesses are able to consistently grow whilst avoiding any major cash-flow issues.

Does Marketlend to supply chain financing? Definitely

Since Marketlend’s inception in December 2014, Marketlend has been providing the supply chain finance solution to small and medium businesses.In recent times, this product has also had the benefit of insurance protection on the solvency of the underlying buyer.

Using market place lending technology Marketlend has been able to offer a cost-effective and a reducing administrative solution to a number of buyers and also to some suppliers to offer their buyers.

When combined with debtor finance, the business can obtain a full solution with 150 days credit. For example,  Marketlend pays the supplier, provides 90 days terms to the buyer and subsequently purchases invoices the buyer who has issued to its underlying customer to pay for the amounts have been paid on 60 days terms.

Not only does the business obtain credit terms that allow them to make better use of their funds, but it also reduces the business administration activities and reduces the need for their collections resources.

Check out more at https://app.marketlend.com.au/supply-chain-finance/ or hear Marketlend explain it in an animated interview at the above link.