Global Supply Chain Finance
What is supply chain finance?
Supply chain finance solutions allow your business to hold on to cash for longer while ensuring your suppliers get paid on time. Optimize working capital and give your suppliers access to critical cash flow to create more sustainability and profitability.
Take command of your working capital with supply chain financing
Supply Chain Finance is a financing method initiated by the buyer in order to help its suppliers to finance its receivables more easily and at a lower interest rate.
Supply chain finance solutions allow your business to hold on to cash for longer while also ensuring your suppliers get paid on time. It’s an easy win-win for all parties. You can optimize working capital and give your suppliers access to critical cash flow to create more sustainability and profitability.
When you choose a supply chain finance platform that allows you to work with your preferred banks or financing companies you ensure fast and efficient payment to your suppliers.
Why your business needs a global supply chain finance solution
Companies that utilize modern supply chain finance solutions thrive because they:
- Unlock working capital
Supply Chain Finance allows you to extend payment terms and hold on to your cash for longer. - Leverage multiple financing options
Don’t get stuck with individual supply chain finance solutions—by using our portal you can work with the bank partners that suit you. - Improve supplier relations
When you work with global suppliers, supply chain financing makes it far easier to manage complex value chains and push financing to suppliers. - Make digital the default
With a modern supply chain finance platform suppliers and buyers can all view and understand who has been paid and what the discount is.
Companies that don’t use supply chain finance often suffer from:
- Poor working capital performance
When you have to pay invoices within short payment timeframes, you have less working capital to grow your business. - Reduced working capital strategies
When you have no supplier financing in place, the only working capital strategy you have is to extend or delay supplier payments. - Poor supplier relations
The longer it takes you to pay suppliers, the more frustrated suppliers become—and may even stop working with you. - Delays caused by manual processes
Without the incentive to digitize, invoices can often take upwards of three weeks to process, meaning you cannot access early payment discounts.
A global supply chain financing solution - on your terms
Tradeshift’s global supply chain finance solution gives you complete control over how you manage supplier payments:
Bank neutral: partner with any supply chain finance company
We work with any lender to facilitate global supply chain finance, so bring your own bank to the solution or work with one of our bank partners. We’re bank-neutral.
Tailor your working capital strategy to fit your needs.
Switch between self-funded and bank-funded solutions to optimize your working capital and company margins.
Blockchain supply chain finance
The added element of blockchain technology enhances the process with increased control, stability, trust and transparency.
Connect to all your suppliers
Get the most from your early payment programs with superior supplier segmentation, onboarding and early discount capture — all in one place.
An unparalleled suite of tools
Use your Tradeshift corporate virtual credit cards to manage all payments easily, even when you’re on the go.
Unified experience
See your invoices. Then pay your invoices. With one place to access all your supply chain finance options from all your banks, it’s that easy.
Supplier financing with early invoice payments
Tradeshift Cash gives you early, reliable payments no matter your buyers’ payment terms. And there’s no messy paperwork or waiting around. Get the cash you need, now—it’s that simple.
You may also be interested in…
Tradeshift and HSBC: Powering Embedded Financial Services
Tradeshift and HSBC created waves when they announced an agreement to launch a new, jointly-owned business focused on embedded finance solutions and financial services apps.
How early payments increase your working capital
To help you revolutionize how your organization tackles early payments, we’ve broken down the components behind using early payments to increase working capital.
How to Calculate Working Capital Requirements: Quick Start Guide
It’s time accounts payable played a bigger role in the working capital strategy of the organization. Here’s a refresher on exactly what working capital is and how it’s calculated.
Supply Chain Finance Solutions - FAQs
Supply chain finance is a financing solution that consists of a shared agreement between buyers and sellers that increases efficiency and speeds up cash flow by lengthening the time buyers have to pay their invoices and allowing suppliers to access their money faster.
Supply chain finance may also be widely referred to as confirming, accounts payable discounting, trade finance, or simply as supplier financing.
Supply chain finance is an amalgamation of solutions that can provide payment flexibility by leveraging outside banks and financial institutions which, in turn, allows suppliers to get paid faster. When supply chains are integrated with finance, businesses can have a better and deeper understanding of the operations in both, which can lead to heightened visibility, reduced costs, and more flexibility.
Supply chain finance reduces supply chain risk, improves the relationship between buyers and sellers, gives buyers more flexibility in payment, and allows sellers to have more control and forecasting abilities in the process.
The 4 main areas of supply chain management are integration, operations, purchasing sources, and distribution.
1. Integration – Integration in supply chain management is the effort to ensure communication isn’t siloed, and everyone in the supply chain is on the same page. With more direct and integrated communication, misunderstandings and mistakes can be avoided.
2. Operations – Operations in supply chain management is the streamlining of day-to-day activities that contribute to a healthy supply chain. These may include an overview of current machinery, an analysis of past processes, and more to ensure the daily operations are as efficient as possible.
3. Purchasing sources – As the name suggests, this is the phase in supply chain where materials needed have been identified and are actually sourced. This area of the supply chain is also where relationships between buyers and sellers can be built and strengthened.
4. Distribution – In this area of the supply chain, distribution ultimately boils down to buyers receiving what they have purchased. In order for distribution to be executed smoothly, a strategic plan must have been created and implemented by the distribution team.
Supply chain management is composed of 5 different main processes. These 5 processes include: planning, sourcing, making (inventory), transportation (delivery), and returning of goods.
1. Planning – Planning, in context of being one of the main 5 supply chain processes, is the proactive assessment of anticipated demand and the subsequent coordination to meet that demand.
2. Sourcing – In the supply chain process, sourcing is the efficient and cost-effective procurement of needed goods and materials.
3. Making (inventory) – Anything the organization needs to do to turn raw materials into a final product occurs during this stage of the supply chain process.
4. Transportation (delivery) – This part of the supply chain process refers to the providing of goods and services to buyers. Some additional elements of this step include the reliability of those shipping the finished goods (transportation solution providers, drivers, and logistic services).
5. Return of goods – If the goods received aren’t up to standard or simply don’t fulfill the need of the buyer, there’s always a chance a return of goods may need to occur. In this step, returns could be initiated by an incorrect delivery, complaint of quality, or order discrepancy.
Experts highlight 7 key risks in supply chain management that include environmental risks, legal risks, scope of schedule risks, sociopolitical risks, financial risks, human behavior risks, and project organization risks.
1. Environmental risk – CDP reports that companies will face up to $120 billion in costs from environmental risks in their supply chain by 2026. Under the umbrella of environmental risks, some of the most common include air pollution, chemical pollution, deforestation, and not using nonrenewable resources like water and energy efficiently.
2. Legal risk – In supply chain management, legal risks are typically derived from within the supply chain, in agreements or contracts made between businesses. If some elements of a contract are not met, the company at fault will face penalties.
3. Scope of schedule risk – scope of schedule risk in supply chain management speaks to the efficiency and effectiveness of the project management and timeline forecasting. If not well thought out and meticulously planned, poor project and time management can set the entire supply chain back.
4. Sociopolitical risk – This risk is especially sensitive as it speaks to potential violations of human rights, worker welfare, as well as sustainability practices. Elements that could make sociopolitical risk an even more present threat include wars, revolutions, or other regional disputes.
5. Financial risk – The risk here in supply chain management is the potential for organizations to run into a situation that could threaten their financial health. Some examples of this include an unpredictable market, financial issues among suppliers, and unanticipated inflation.
6. Human behavior risk – Human behavior risk is especially interesting within supply chain management. Concerns with human behavior, like someone in transportation getting into an accident or a prominent figure getting sick, are all human behavior risks that could potentially impact your supply chain.
7. Project organization risk – project organization risks can arise if project management has not properly allocated time and resources for pivotal portions of supply chain management – like not scheduling enough staff members to handle demand or not allocating appropriate resources to meet the deadline of the project.
The 5 biggest supply chain challenges in 2022 are found to be geopolitical uncertainty, energy shortages, climate change’s impact on extreme weather, labor conflict, and the ever-rising cost of living.
1. Geopolitical uncertainty – Amid conflicts between Russia and Ukraine and rising tensions in other parts of the world, geopolitical uncertainty has risen as a supply chain challenge to keep an eye on. Not having a clear vision of the geopolitical landscape presents a sizable challenge.
2. Energy shortages – As the UK unfortunately well knows, energy shortages are becoming more and more common. With energy shortages comes a rise in energy costs, sending a ripple effect down the entire supply chain.
3. Climate change – Climate change presents a litany of issues for supply chains, including an increase in volatile weather conditions (like hurricanes, wildfires, and droughts) which, in conjunction with extreme temperatures, can pose disruptions to even the most resilient supply chains.
4. Labor conflict – Labor conflict, labor disputes, or labor strikes occur when there are human rights violations in the working conditions for those creating the goods and materials needed in the supply chain. Labor strikes can easily slow down production or change the anticipated timeline altogether.
5. Cost of living – Cost of living, or inflation, reflects the ever-rising prices of, well, everything. This contributes to a less steady supply of consumers as the uncertainty of the economy has them spending very cautiously.
Some solutions to supply chain issues facing professionals today are to closely track inventory, optimize your workforce, strengthen supplier relationships, and diversify your supply chain where possible.
Corporate virtual credit cards like Tradeshift Go, help finance the supply chain because they allow organizations to anticipate, track, and verify purchases made by employees. Because virtual credit cards have predetermined limits and are easily tracked, they can reduce the risk of fraud.
