Supply chain finance, also known as reverse factoring, is a financial tool that can be used by multinational companies to improve their working capital management and support their suppliers. By using supply chain finance, a multinational company can provide its creditors (i.e., its suppliers) with early payment for the goods or services they have provided, while at the same time extending the payment terms for those transactions.
There are several advantages of supply chain finance for both multinational companies and their creditors. Here are a few examples:
- Improved cash flow for suppliers: By providing their creditors with early payment through supply chain finance, multinational companies can help their suppliers improve their own cash flow. This can be especially beneficial for small and medium-sized suppliers that may have limited access to financing.
- Increased competitiveness for multinational companies: By extending their payment terms through supply chain finance, multinational companies can improve their working capital management and free up cash that can be used to invest in other areas of the business. This can help them become more competitive in the marketplace.
- Reduced financing costs for multinational companies: By using supply chain finance, multinational companies can often obtain better financing rates than they would be able to obtain on their own. This can help them reduce their financing costs and improve their bottom line.
- Enhanced supplier relationships: By providing their suppliers with early payment through supply chain finance, multinational companies can strengthen their relationships with their suppliers. This can help them improve their supply chain management and ensure a steady supply of goods and services.
In conclusion, supply chain finance can provide a range of benefits for both multinational companies and their creditors. By improving cash flow, increasing competitiveness, reducing financing costs, and enhancing supplier relationships, supply chain finance can help multinational companies and their suppliers succeed in a global marketplace.
Qube Supply Chain Finance Added Value
PRI® Supply Chain is a proprietary payables & receivables management platform, supported by Qube Servicing, generating improvement of working capital by accelerating the payment cycle and turning receivables into cash faster.
The PRI® Supply Chain platform manages, controls and monitors , on a daily basis as well as intraday, all tasks defined as part of supply chain finance to ensure:
- Enhanced visibility of approved invoices;
- Accelerated collections processes;
- A low-cost financing option; and
- Streamlined account reconciliation and forecasting.
PRI® Supply Chain has been developed based on the in-depth experience with supply chain finance as well as receivables finance with the objective to have a fully front-to-backend automated supply chain finance platform based on historic and actual creditor data which to provide full insight & transparency which will be evidenced by demo on request.