How to unlock cashflow via Supply chain finance

1. How to Unlock Cashflow via Supply chain finance? In today's markets, there are a plethora of investment fund ideas. This can be accomplished through mergers and acquisitions, investing in new products, and establishing a new division. The most important thing is understanding where the money for the investments comes from. There are numerous ways to raise funds in the market. One option is debt and equity, suitable for large businesses but costly and time-consuming. A company can also reduce the number of employees or relieve unwanted assets. On the other hand, these things necessitate a significant overhauling process, resulting in substantial organizational changes. One of the best ways suppliers can raise funds is through supply chain finance, also known as reverse factoring. Funds hidden in a company's supply chain can be accessed. Supply chain finance can be used to raise capital in three ways: 1) Inventory reduction 2) Receivables reduction 3) Supply increase. Supply chain finance is how suppliers can get the advance money for their supplies with the help of the invoices presented by the buyers. These invoices are then given to banks or non- bank financial companies (NBFCs) for a small discount, and the capital is raised before the invoice due date. This unlocked money can be used for a variety of purposes of working capital needs. Both parties’ benefit from this: the buyer could get an early payment discount or extend DPO by asking for longer tenor, while the supplier generates additional operating cash flow, reducing risk throughout the supply chain. The following are some of the advantages of leveraging supply chain finance: 1) It's revolving. 2) It is cost effective and efficient. 3) Easily accessible when required To scale up the supply chain finance, it’s usually driven by large buyers through a platform solution. Supply chain finance platform can help achieve straight through processing, help facilitate e-KYC of suppliers, and provide end to end visibility of supply chains. This has significantly enhanced operational efficiencies and risk management for all parties – suppliers, anchor buyers, and banks.