![]() ![]() Supplier initiated programmes (including reverse factoring) allow suppliers to sign-up to the programme and request early payment on approved invoices before they are due. They can be described as “supplier initiated” or “buyer initiated”. There are two broad types of supply chain finance in the market. A position that is often backed up by credit insurance. If the borrower does not honour the debt, the supplier is unlikely to step in and help! Rather, supply chain finance lenders such as TradeBridge take comfort from the overall strength of the borrower. The main difference being that funds are only used to pay suppliers.įrom the security perspective, there is obviously no advantage for a lender to take security over a supplier invoice. Whilst some providers of supply chain finance try to dress it up as something else, supply chain finance is a form of working capital finance and provides liquidity in a similar way to an overdraft. Supply chain finance on the other hand looks down the supply chain to the suppliers. What is Supply Chain Finance and How Does it Differ?įrom the borrower’s perspective, factoring and invoice discounting look up the supply chain to a company’s customers and use these debts as security. retailers), or those operating in sectors unpopular with lenders, factoring and invoice discounting are obviously not an option. They can also be quite invasive for the borrower, with audits, reporting and requirements to disclose (non-confidential) arrangements to customers.įor companies with few customer invoices (e.g. As such, they can have a high fixed cost. Lenders typically earn most of their income through the application of fees rather than the interest rate on the funds lent. It is dependant on the invoices being funded and the lenders view on the end customer. The amount of funding available at any point in time can vary tremendously. This is usually based on selling the complete debtor’s ledger but allowing the borrower to manage the receivable collection themselves.įactoring and Invoice Discounting Downsides: Invoice discounting on the other hand is a more wholesale arrangement. Even purchasing just a single invoice is now common via peer to peer platforms. In broad terms factoring is transactional, with the lender purchasing and then taking over the collection of each receivable. The lenders repayment source is the collection of these accounts receivable from the end customer (i.e. They will secure their loan using this asset as the primary collateral, or even purchase the complete ledger. The most liquid of these assets from a lenders perspective is the accounts receivable ledger. To access working capital finance, businesses have traditionally used short-term trading assets such as stock or trade receivables as security. But what is it and why do it? How is it different from the more traditional approaches of factoring and invoice discounting? I have been working with Triumph for almost 5 years now and all I can say is that service is impeccable.Supply chain finance is a relatively new way of providing liquidity to businesses. “If there was a 10-star option I would give it to this company. Great customer service overall, and they go out of their way for their customers, highly recommend.” Google Review “Excellent company, very professional and organized and always quick to respond to any inquiry. So helpful over the phone.” Google Review “Triumph’s team has been a major help to me and my business. Wouldn’t go anywhere else.” Google Review They are always ready and willing to deal with any issues that may come up. I was a little apprehensive about using a factoring company but once I got started and received my first funding I realized that it was the best for my company! Thanks Triumph!” Google Review “Triumph’s service is superb! They have a very easy process to get you started! They were very helpful and professional. There first response with me was like talking to a family member and that hasn’t changed. ![]() “I am so thankful that I found a great factoring company like Triumph Business Capital. Also very organized and well laid out plan for helping new customers get started. Customer service is like talking to an old friend. “This is how everyone should run a business. ![]()
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