Supply chain finance is a form of supplier finance in which suppliers can get early payment for their invoices. It is a financial exchange wherein a lender or a third party facilitates financing for the supplier on behalf of the customer. This credit facility helps reduce the risk of supply chain disruption and optimises the flow of working capital for both buyers and sellers. In simple words, a supply chain refers to a series of steps from manufacturing to the distribution of goods to users.
Under this financial solution, 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 on time. Supply chain finance is set up by the buyer instead of the supplier; therefore, it works more efficiently if the buyer holds a higher credit rating than the seller. It also helps suppliers receive supply chain finance at a lower cost than they can otherwise access.
Bajaj Finserv offers supply chain finance in India to provide sufficient liquidity in the business so that the movement of goods is not blocked due to shortage of funds. Businesses can thus make the most of this funding to streamline their supply chain. This credit facility comes with simple eligibility criteria and minimal documents, make funding more convenient than ever.
Now, take a look at the features and benefits that Bajaj Finserv brings with its supply chain finance.
Get financing up to Rs.45 lakh from Bajaj Finserv and address all your business’ supply chain needs - right from sourcing and procuring raw materials to managing your logistics.
Bajaj Finserv provides pre-approved loan offers to its existing customers for faster loan processing. Discover your pre-approved offer here and get funds quickly.
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.
Get your application approved in 24 hours* by providing just 2 documents and finance your supply chain with ease.
Withdraw as much you need from the sanctioned limit with our Flexi loan facility and pay interest only on the amount used. Pay interest only EMIs and lower your monthly outgo by up to 45%*.
You can access your supply chain finance account online anytime, from anywhere with our customer portal – Experia.
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 -
In this method, the lender providing supplier finance 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 this method, 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 a 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 the requirement for funds that they have.
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