Supply Chain Financing and Your Restaurant Business

Many businesses, including restaurants, are looking for a source of cash. Larger companies have easy access to external funding sources, such as equity and debt, but some smaller operations, such as restaurants, can find it difficult to acquire the necessary funds to keep their businesses up and running. Supply chain financing from international trade finance companies like Tradewind, who can fund your restaurant’s entire line of buyers and suppliers, is often an effective alternative to a loan from a traditional bank and other sources of cash that are popular among larger enterprises.

Supply chain finance companies allow a restaurant to access funds trapped in its supply chain. There are three different levers that management can use to access these supply chain funds – increase the restaurant payables, decrease restaurant receivables, or decrease the business inventory. There are multiple kinds of strategies available in supply chain financing, including letters of credit, factoring, dynamic discounting, term negotiations, and reverse factoring.

Technology Makes Supply Chain Financing More Accessible

Supply chain financing has helped businesses for decades, but thanks to cloud-based supply chain finance platforms, the process has become more efficient, easier to access and launch, and more effective. Because of new technology, more industries and a greater variety of companies can access supply chain financing.

Here are some ways technology has helped with supply chain financing:

•    Effectiveness – Technology allows for greater transparency among businesses using supply chain financing and their participating suppliers. Everyone uses the same network and can quickly retrieve any needed details, such as knowing when cash will be accessed and what the various payment terms are. This transparency, hence, improves relationships among all parties along the supply chain.

•    Efficiency – These days, technology allows companies to reach out and get all of their suppliers on board so that they too can access the benefits of supply chain financing. By extending efforts to all suppliers, there is greater availability of liquidity across the complete supply chain, which has been shown to strengthen relationships between suppliers and buyers.

•    Ease – Cloud-based platforms function as a marketplace where supply chain finance providers deliver added value to participating companies. These platforms offer a place for source financing, onboarding tools to engage suppliers, and analytics that will give all parties full insight on the supply chain, as well as their financial system.

What Should You Consider When Looking for a Supply Chain Financing Provider?

When you are looking for a provider for your supply chain financing needs, there are several things you should take into consideration. Not all trade finance organizations operate the same way or use the same approaches when doing business. You want to work with a global financing company that can help support your operations based on payables, receivables, and inventory.

•    Check to see if the platform offers multi-source financing. When a company provides multi-funding strategies, both buyers and suppliers have a greater variety of liquidity sources, which not only diversifies funding options but also lowers funding costs.

•    You want to work with a source that has a global platform. You want a platform that matches the suppliers with those offering to fund across all geographic regions, jurisdictions, and currencies.

•    Inquire as to how the provider will engage with your procurement team. For a successful supply chain financing program, the management of suppliers and their onboarding is essential.

When you use supply chain financing, your restaurant can unlock its resources, trapped within the supply chain. Suppliers also have a greater ability for controlling finances by getting access to funds when they are needed most.

You don’t want to entrust your supplier relationships to just any company or just anyone, so make sure you check that the organizations are well-established and have a top-notch reputation along with high recommendations from other clients. 

Getting Your Restaurant on Track with Supply Chain Financing

There may come a time when you find yourself caught in a financial bind because of steep competition and rising consumer demands faced off against increased supply costs and the complexity of the supply chain process. Restaurants, to name one industry, are facing pressure unlike before to maximize profits while managing volatility.

Many restaurants are using a variety of functions, such as menu management, procurement, finance methods, operations and marketing, that incorporate outdated practices that aren’t getting the job done.  Supply chain financing, offered by an international trade finance company like Tradewind, has been proven effective for restaurants, including those using the farm-to-fork approach, in overcoming challenges and accessing the money that they need to keep their businesses up and running and to meet their full potential.