If you run a business that depends on produce, you understand that getting your shipment where it needs to go promptly is imperative for the success of your business. Produce is fragile, and it requires expedient delivery before it spoils. Also, wrong temperatures and even the slightest delay can end up destroying valuable products. When you use supply chain financing from international trade finance companies, you can protect your shipment and your business.
Supply chain companies offer a new cash source to various industries, ensuring companies have access to the supplies that they need when they need them. While some companies rely on external funding sources, such as equity and debt, it can be challenging to acquire such funding.
External funding sources can also be an expensive option that significantly depends on the sentiment of the investors, which ends up being a costly and time-consuming approach. There is another option available that doesn’t take up a whole lot of time, doesn’t cause significant disruptions, and doesn’t require organizational change.
What Is Supply Chain Financing?
The option to free up funds and make them more accessible is called supply chain financing. While supply chain financing has been in use for years, it is now more available thanks to the rise of cloud-based platforms. They have had a major impact on the use of this specific kind of funding and its accessibility. The cloud-based platforms make the funding process more effective, easier to launch, and more efficient. As a result of such advancements, a wider range of companies can benefit from supply chain finance options that are offered by some of the best factoring companies.
Because of technology, there is more transparency between companies using supply chain financing and participating suppliers – including your produce supplier. Everyone can access the same information thanks to the network. Technology allows companies to reach out and get all their suppliers on board rather than just the top suppliers. Technology also allows all suppliers in the supply chain to access supply chain funding.
Financial organizations that provide supply chain financing offer more value to companies through cloud-based platforms that include a marketplace with supplier onboarding tools and marketplace source financing. These platforms allow you to streamline the entire team and get your suppliers in line and providing you with the supplies you need, such as produce. Supply chain financing can make a significant difference.
Supply Chain Financing Gives Your Suppliers Faster Access to Funds
Like you, your suppliers are in business to make money and to make a healthy profit. They don’t want to wait any longer than necessary to get paid. They need those funds to cover the costs of running their business – getting their supplies, paying their employees, and other expenses. Supply chain finance isn’t a loan, but it extends your accounts payable as the buyer. For your suppliers, including your produce supplier, it represents an actual sale of their receivables. Companies of all sizes can use it. Many financing projects target larger businesses, so many companies don’t get the help they need. Supply chain financing can work with organizations of all sizes.
Through supply chain financing, you can optimize your working capital and preserve your business’ liquidity. Suppliers sell their receivables – or invoices – at a discounted rate to the trade finance company. In return, they get funding much more quickly, which frees up any working capital. The buyers, in turn, are usually given longer to repay the debt. The process doesn’t depend on the supplier’s creditworthiness, but instead, the finance company vets the buyer’s credit history and deals directly with them.
Different transactions can take place as part of supply chain financing. It can connect financial transactions to value as they go through the supply chain. It also encourages more collaboration between the seller and the buyer, avoiding the competition that usually ends up throwing the buyer against the seller or vice versa.
How to Get Started with Supply Chain Financing for Your Produce Shipment
If you are ready to free up your cash flow without going into debt, you should start checking with professionals like Tradewind, a leading international trade finance company, to learn what they have to offer your business. They provide supply chain financing and export factoring that can fit your produce business needs.
More businesses are taking advantage of supply chain finance companies because of the advanced technology and cloud-based platforms that are used in the funding process. With the right planning and with the right supply chain finance company, you can make sure your business stays running like it should because of access to funds. That way you can count on getting your produce shipments when you need them.