Supply Chain Finance

Rules that guide business activity transformed dramatically with globalization. The supply chain lengthened as bigger companies outsourced equipment, capital intensive plants and labour intensive activities to global partners down the supply chain. From being manufacturers alone, companies are now managing a web of third parties in order to distribute their products efficiently. Therefore, the majority of the capital deployed is no longer towards financing property or equipment but to finance working capital.

What is Supply Chain Finance?

Supply chain finance (SCF) can be understood as a process which involves the use of a set of tech based solutions which cuts financing cost, thereby, improving business efficiency between buyers and sellers in a sales translation. The cost cutting is achieved by automating transactions.  SCF enables businesses to get short term credit and it is usually used to optimise the flow of capital for both buyers and sellers.

The most important utility of SCF is providing sufficient liquidity in the supply chain so that the movement of goods is not blocked owing to the shortage of funds. The invoices generated by a business are discounted and loans are advanced enabling the businesses to operate without disruption, which could otherwise appear in form of bill clearance and delayed payments. Besides, a supply chain loan ensures minimal disruption in the manufacturing process too.

In essence, SCF provides efficient financing of the value chain. It helps both the buyers as well as the sellers improve cash flow and to reduce the working capital by utilising the buyer’s credit rating. Besides, it helps in getting short-term credit that allows buyers to lengthen their payments terms and provides suppliers with an option to receive payments earlier.

How Supply Chain Finance Works?

SCF requires an external finance provider and a SCF platform. The finance provider settles supplier invoices ahead of the invoice maturity date, at a lower financing cost than the suppliers funds. Other parties then share the benefit of the lower cost of funding.

Following the mechanism of supply chain finance.

  • After an order is given to the supplier, the supplier delivers on the order and invoices the buyer.
  • The buyer, upon approval of the invoice, confirms that it will make the required payments to the financial institution as and when the invoice matures.
  • The supplier discounts the financial institution at a discount rate agreed earlier.
  • The buyer makes the payment as agreed with the financial institution.

Owing to this arrangement, the buyer is able to negotiate better payment terms and/or prices with the supplier.

Features and Benefits of Supply Chain Loan

  • High value loans:

With Business Loan available on Finserv MARKETS, you can procure financing up to Rs. 30 Lakhs which can help address your crucial business’ supply chain requirement right from sourcing and procuring raw materials to logistic management.

  • Pre-approved offer:

The process of getting a supply chain loan is as easy as it gets if you decide to stop by Bajaj Finserv loans as it provides pre-approved offers without the need for tedious paperwork.

  • Collateral-free financing:

One of the most important benefits with Finserv MARKETS is that you get collateral-free loan options. It takes away the pressure on you to pledge your personal and commercial assets in order to finance your supply chain.

  • 24-hour loan approvals:

Another benefit that considerably eases the whole process of availing a supply chain loan is the 24-hour loan approval facility. You can get your application approved in 24 hours by providing just two documents.

  • Flexi loan facility:

Bajaj Flexi loan available on Finserv MARKETS allows you to withdraw as many times as you required. You can pay interest only on the amount used and lower your EMIs by up to 45 per cent. Besides you can also repay as per your convenience to suit your business cash flow.

  • Online Account Access:

You can access your supply chain Finance account online anytime, from anywhere.

The interconnected business ecosystem requires more than what the traditional external mode of financing had to offer. With globalisation and lengthening supply chains, the methods for financing require changes. Supply chain finance allows you to harness the tech based solution to bring more efficiency in terms of capital flow between the buyer, the seller and the financial institution.

Supply chain loans, available on Finserv MARKETS, can allow businesses to avail short-term loans to meet their immediate requirements at lower rates. It optimises the flow of capital for both buyers and sellers.

You can, therefore, make most of the funding available on Finserv MARKETS to streamline your supply chain which are available at simple eligibility criteria and documents.

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