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How does supply chain finance work?

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In the first instance, the buyer will enter into an agreement with a supply chain finance provider and will then invite its suppliers to join the program. Some supply chain finance programs are funded by a single bank, financial institution or alternative finance provider, while other programs are run on a multi-funder basis by technology specialists via a dedicated platform.

While buyers have traditionally focused on onboarding their 20 or 50 largest suppliers, technology-led solutions now enable companies to offer supply chain finance to hundreds, thousands or even tens of thousands of suppliers across a global supply chain. This is made possible by providing user-friendly platforms and streamlined supplier onboarding processes which makes it simple to onboard large numbers of suppliers rapidly and with minimal effort.

Once a supply chain finance program is up and running, suppliers can request early payment on their invoices. From there, the supply chain finance process plays out.

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