5 Essential Aspects to Look for in a Supply Chain Finance Program

  • ∙ 3 min read

Corporate buyers and suppliers are integral cogs in the wheel of the supply chain. While private companies’ business operations depend extensively on the raw materials that suppliers provide, suppliers earn a considerable part of their revenues through corporate firms. But the problem arises when suppliers and private companies cannot agree upon the payment terms and dates.

Supply chain finance, or SCF, programs enable buyers to partner with financial institutions or finance management consultants, who pay on behalf of the buyers. This way, they help optimize working capital for buyers as well as suppliers. If planned well, SCF programs can help companies manage their finances optimally, avoid payment delays, and establish continued healthy collaborations with suppliers. Here are some cornerstones to a successful SCF program:

Well-defined financial goals

Before starting with an SCF plan, buyers and suppliers should establish their individual objectives of enrolling for the plan. For example, an essential objective should be to optimize working capital for suppliers, for which they should partner with banks or NBFCs. Such objectives should be clearly stated even while the plan is underway.

Establishment and maintenance of stakeholder relations

A FinTech company or finance management consultant should help suppliers and buyers coordinate effectively, so that the plan is carried out systematically and both the parties benefit from it. This also ensures that suppliers can quickly coordinate with buyers in case of any concerns or challenges in terms of payments, terms, etc. For example, the FinTech platform should update suppliers efficiently about any changes in payment due dates from the buyers’ end. This way, suppliers know when to expect their dues and are well-informed in case of any changes to the plan.

Partnerships with the right financial institutions

Another essential aspect of an SCF program is to partner with banks and NBFCs that adequately satisfy the financial requirements of all the entities involved. The financial institution should provide the required guidance and support to suppliers, helping them gain a firm foothold, while also assisting corporates with their financial planning and management.

Adequate utilization of technology

Finally, an SCF plan should leverage technology as effectively as possible, so that financial processes are streamlined and organized. The FinTech platform should be able to process approved invoices and make timely payments to suppliers without human intervention. Buyers should also be able to flexibly change the due payment date in case of any unavoidable delays. Such features in terms of finance payables and receivables go a long way in streamlining the finance management process.

Preparing and implementing an SCF plan can be quite rewarding if one has the right support and guidance right from the initial stages. On the Zuron application, buyers simply need to upload their approved invoices, and the app makes timely payments to suppliers by the due date. It can also be easily integrated with the company’s existing ERP software system, which makes the process a breeze. We would love to know more about your finance management needs and provide effective, data-driven solutions. Click here to know more!