What is it?
Supplier Payments can enable buying organisations to make early payments and ease the cost of supplier finance, thereby supporting their supply chains.
Effectively, in the supply chain, suppliers finance the period between an order being placed by a customer and the subsequent payment being received. Historically, this has been funded though other sources such as loans, overdrafts or factoring. However, many of these options have become less readily available or more costly, thereby impacting suppliers’ working capital and their ultimate ability to fulfil future orders.
Supplier Payments is a service which uses a company’s financial strength to provide lower cost finance to suppliers. The buying organisation simply notifies the supplier payments provider of invoices that have been approved for payment. The supplier payments provider immediately offers early payment to the supplier ahead of the agreed trade terms. A small deduction is made from the invoice value paid to the supplier, however, this is considerably less than the traditional forms of supply chain finance.
What are the benefits?
- Buying companies benefit from an improved working capital position and enhanced working relationship with supplier companies.
- Suppliers receive early payment, improving their working capital position and a reduced cost of funding.
Where can I find out more?
Further details can be provided by your local corporate bank.
Download the factsheet in PDF format - here.