Many SMEs are ambitious looking to grow into large multinational companies with increased production capacity and higher quality goods or services that meet the needs of a global audience.
Their efforts have resulted in a significant expansion of the supply chain, which in turn reduces the capital available for operating costs.
It is important for companies to maintain and improve their cash flow so they have to pressure suppliers to expand their credit lines. To get more information about supply chain risk management you can visit https://www.europeanfinancialreview.com/category/strategy-management/contract-and-commercial-risk-ma.
This is where supply chain financing (SCF) is an option because SMEs have the option to pay their suppliers without having to wait for payments from their dealers.
Given the important role supply chain finance plays in optimizing the available resources, here are 10 things you need to know:
1. What is meant by supply chain finance?
Supply chain financing describes a number of solutions that increase supply chain cash flow. It is designed to allow organizations to extend payment terms and provide solutions for buyer obligations and discount invoices.
Traditional supply chain programs differ from supply chain funding decisions that increase working capital. An established supply chain is mutually beneficial for both suppliers and buyers.
In addition, supply chain finance is an ecosystem where buyers, suppliers, and NBFCs work together to improve cash flow. By linking invoices to the procurement process, the supply chain eliminates unnecessary delays and simplifies business.