Unlike the traditional mode of external financing, supply chain finance is a modern, technology-induced process that integrates business with financing. It links different parties that will complete a transaction, namely the buyer, the seller and the financial institution.
SCF is a process that enables businesses to avail short-term credit to meet their small to medium funding requirements. SCF is mostly availed to optimize the flow of working capital for both buyers and sellers.
Bajaj Finserv brings supply chain finance in India to provide sufficient liquidity in the supply chain so that the movement of goods is not blocked due to fund shortage. Businesses can thus make the most of this funding to streamline their supply chain. Available against simple eligibility criteria and documents, these high-value loans make funding more convenient than ever.
SCFs utilise the existing business solutions that can optimise its working capital and use it to provide sufficient liquidity. It allows for faster access to money, thus ensuring the flow of business is not disrupted. The invoices generated by a business are discounted and loans are provided so that a business does not have to wait for bill clearance and can make payments in time
A supply chain loan thus ensures the manufacturing or production process is not disrupted. While it gives early access to funds for the sellers, buyers can enjoy a longer time before making payment. An SFC works most efficiently when the buyer holds a higher credit rating than the seller.
Now, take a look at the features and benefits that Bajaj Finserv brings with its supply chain finance.
With pre-approved offers by Bajaj Finserv, there are no queues, no forms and no details required. Avail financing easily and quickly as everything is already done for you. Discover your pre-approved offer here.
Bajaj Finserv offers collateral-free loan options so that you don’t have to pledge any personal or commercial assets, to finance your supply chain.
Finance your supply chain with our Supply Chain Finance and get your application approved in 24 hours by providing just 2 documents.
Withdraw as much you need and as many times with our Flexi Loan Facility. Pay interest only on the amount used and lower your EMIs by up to 45%. You can also repay as per convenience to suit your business cash flow.
Bajaj Finserv gives you the option to access your supply chain Finance account online anytime, from anywhere.
To know how supply chain finance works; you must first understand the parties involved. Irrespective of the type of financing involved in SCF, it always includes three parties, a buyer, a seller and a financing company. Lenders offer several SCF transactions, which can include the terms of accounts payable, financing inventory, discounting of payables, etc.
The supply chain finance process thus works in two ways -
- By connecting financial transactions as they move forward to complete the supply chain.
- By encouraging or creating buyer-seller collaboration.
The two methods used to complete these financing transactions are -
- Discounting of bills, accounts payables, etc.
- Factoring the purchase of inventory and other items that boost the flow of working capital also known as purchase financing.
In the first method, i.e., discounting, the lender providing SCF discounts the invoices generated by the seller and provides funds immediately as a discounted amount. Simultaneously, the buyer receives an extended period for bill payment which the financial institution collects in full on maturity.
In the second method, i.e. factoring or purchase financing, a buyer enjoys trade credit from a partner lender providing SCF. The lender also plays the role of an intermediary between the company and the supplier from whom it will purchase raw material. In this arrangement, the company places purchase order for inventory or any other item with the financial institution, which in turn, collaborates with a supplier to fulfill the order. The company pays the invoice thus raised at net credit terms.
While this is how supply chain finance works, buyers and sellers can negotiate the SCF terms with their financial institution based on the leverage, i.e., urgency in requirement for funds that they have.
Avail a supply chain finance loan by fulfilling simple eligibility criteria and providing minimal documentation.
Bajaj Finserv offers Supply Chain Loans at low interest rates and nominal fees and charges.
Apply for a Supply Chain Finance from Bajaj Finserv online in just 3 easy steps.
Manage operational expenses
Up to Rs. 32 lakh | Flexible tenor options
Hassle-free finance for your enterprise
Up to Rs. 32 lakh | Approval in 24 hours
Avail customized loans
Up to Rs. 32 lakh | Minimal documentation
Funds to upgrade machinery
Up to Rs. 32 lakh | Pay only interest as EMI