Are There Limits to the Company Size that Can Use Supply Chain Financing?

Supply chain financing helps keep buyers and suppliers on good financial terms. When dealing with multinational buyers on one side of the supply chain, and a varied group of suppliers located in different countries on the other end, it can be difficult to free up working capital for all parties of the transaction. Suppliers, in particular, often become frustrated when not paid on time.

International trade finance companies like Tradewind offer solutions for this ongoing issue. Also known as supplier finance or reverse factoring, this option increases cash flow by helping buyers extend their payment terms with suppliers while allowing these suppliers, in turn, to be paid earlier than usual.

The result is a win-win situation for both parties since the buyer can optimize their working capital while the supplier generates additional positive cash flow. Plus, this form of financing helps decrease risks across the supply chain. 

Can Any Size Company Use Supply Chain Finance?

Maintaining a steady cash flow can be a struggle for any size business. It is especially difficult for small business owners because they often operate on a tight budget. If there is ever a sudden need for more money, many small businesses are unable to deal with the surprise financial burden. Issues such as late payments from customers and clients, equipment repairs or replacements, and unexpected fees are all too common in the business world.

One of the best solutions to the standard financial issues that small businesses face is supply chain finance. This type of financing helps companies of all sizes to stabilize their financial situation so that they can stay on track. It allows them to keep their suppliers and customers happy while freeing up their additional capital to help their business grow.

What Issues Can Businesses Face Due to Cash Flow Problems?

When a company faces serious cash flow problems, it can lead to many other issues. The company may experience production delays, quality issues, and eventually, business failure if they don’t resolve the problem soon.

Anytime a business attempts to correct their cash flow problem by delaying their outgoing payments, this can cause additional problems with their suppliers. It turns into a never-ending cycle that is difficult to resolve without some assistance.

Supply chain finance makes it possible for large and small businesses to pay their suppliers on time. This process allows firms to withdraw funds from a separate investor-furnished credit fund. If a supplier is having a cash flow problem, they can request early payment in exchange for a discount or other benefit.

Supply chain finance is a tool that allows businesses to go on and cater to the needs of their customers even if they are start-ups or had a slow month. It also enables companies to create long-lasting partnerships with their suppliers without any inconsistencies with payments.

What Every Business Owner Should Know About Supply Chain Finance

There are several things that all business owners should know about supply chain finance before they get started.

Supply Chain Finance is Not A Loan

Supplier finance is not a loan. Instead, it is an extension of the buyer’s accounts payable. It isn't seen as a financial debt to the supplier, but instead represents an actual sale of their receivables.

No Bank is Required

The programs may be self-funded by the buyer, and everything can be set up without the participation of a bank for funding purposes.

Supply Chain Finance is Not Just for Large Corporations

All types of businesses, both large and small, can benefit from supply chain finance. This cash flow solution can provide you with the support you need to stay afloat, whether you are the owner of a sizeable well-known corporation or a small business just starting out.

Find Out What a Supply Chain Finance Company Can Do for You

If your business needs cash flow assistance, you should consider contacting a supply chain finance provider, such as Tradewind Intelligent Trade Finance, for help. Tradewind offers innovative solutions for international trade based on your specific needs and location. Even if your company doesn’t qualify for traditional bank services, you can still receive the financial assistance you need.

Tradewind offers financing solutions, credit protection for your business, and additional financial services such as collections, dunning, and bookkeeping, making them your one-stop provider for all your finance needs that come with trading.