Why is supplier finance risk free?

Why Supplier Finance is totally risk free for you?

 

Supply Chain Finance or supplier finance, which is my preferred term, has gained significant traction over the last year in the UK.

Put simply, supplier finance is the provision of funds by funders to companies to enable them to pay their suppliers.

All businesses have suppliers which need paying, so supplier finance provides companies of all sizes with another financing tool to add to their funding blend.

Why is supplier finance risk free?

By utilising third party capital to pay your suppliers, one is essentially replacing supplier provided credit with that provided by a specialist provider such as Woodsford TradeBridge. So the liability position has not changed but supplier finance providers are usually open to providing more flexible creditor terms than many cash strapped suppliers can. TradeBridge can extend your days payable and release working capital to help in other areas of your business.

You can also use a supplier finance facility to pay your suppliers early and often bag very generous early payments from them. In many sectors discounts of 3% to 4% are not uncommon for paying only 30 days early. The annual return to you based on such terms is north of 50% p.a. This will drop straight to your bottom line.

Finally, the explosion of e-invoicing has been a huge factor in the take-up of supplier finance. Electronic transmission of invoices enables suppliers at the click of a button to request early payment for an agreed discount on the invoice. Woodsford TradeBridge does the rest.

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Mark Spiteri
Director