Supply Chain Finance.
Supply Chain Finance.
Supply Chain Financing
Supply chain financing is a great tool for companies that need financing to purchase inventory. Unlike purchase order or production finance, the goods being purchased do not need to be pre-sold. These purchase facilities are usually part of a larger asset-based facility that work in conjunction with each other.
Like purchase order funding, vendor finance companies need to know where the goods are at through the entire cycle. Supply chain financing companies will want to track the goods and preferably through the logistics provider's web portal. Supply chain financing companies will sometime require that the client utilize their nominated freight forwarder to ensure that they will be able to track the goods at any time.
Large scale transportation companies that also have a financing arm are starting to add vendor finance programs to their product offering. This is primarily because they have control of the goods already and capital to lend.
Some companies that provide vendor finance programs do not want to carry the inventory and expect to be repaid once the goods arrive at the company's warehouse. These types of programs would be joined with an asset-based loan or accounts receivable funding facility. Once the new inventory has been added to the company's borrowing base certificate, the proceeds will go to the supply chain finance company to payoff the loan that was used to purchase the goods. Transportation companies that provide financing while the goods are under their control will want to be repaid once the goods have been received by the client.
In some cases suppliers will have a vendor finance program setup so credit worthy customers can obtain terms from a third party vendor finance company. The customers typically bear the cost of the financing and must be approved by the finance company for credit.
Supply chain financing is still not a well known financing vehicle and still has not reached its potential market share. As supply chain financing can be rather complex, it is typically used by companies that are continuously purchasing product from overseas vendors.
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Customized Financing Options
Asset Based Lending
Revolving lines of credit up to $20,000,000
Accounts Receivable Factoring
No minimums, up to $20,000,000
Secondary lines of credit for ABL or Factoring
Equipment & inventory facilities
Great for staffing & temp agencies