Whatever be the size of your business, you like to free up capital for its growth. The best way to achieve this goal is supply chain finance. It helps in increasing your working capital while implementing a growth strategy. 

However, based on your business objective, niche, and footprint, your supply chain financing needs customization. Before talking about the financing solutions, you need to know what is supply chain?  

What is supply chain financing?

Supply chain financing refers to the efficient way of making the buyer’s supply chain stable. This technology-based solution reduces the financing costs.  It also increases efficiency for sellers and buyers related to the sales transactions.

Suppliers also find benefit from the financing process, as it enables them to make the receivables cycle shorter. On the contrary, buyers also receive credit from suppliers at a reasonable cost. It is better for them than to choose an online business loan apply. While suppliers have easy access to the owed money, buyers find time to repay the balances.

Identify the desired resource and outcome

With the proper strategy, your supply chain financing can result in failure. You must clear your objectives and find the team members influencing the supply chain. Moreover, you have to select the right finance partner to assist your supply chain finance. There may be differences based on the desired result. For instance, you need to have better working capital for a long-term period. Furthermore, you have to make optimization of short-term supplier payment terms. Your team has to agree to the outcomes and find the necessary activities.

Collaborate with suppliers and different stakeholders

Similar to other projects, your supplier chain finance needs a collaborative approach. Your relationship status with suppliers is one of the major factors. 

You have to interact with suppliers to inform them about the potential long-term benefits. It will enable them to identify the challenges of implementing strategy. 

Your suppliers need to choose from the available options, like multiple payment terms. It will increase their eagerness for collaboration. 

Manage your spend data

The availability of the spend data is one of the common concerns about procurement projects and supply chain finance. Due to the increase in global-scale organizations and more complications, you can find the presence of several data formats and reduced compliances. That is why it is not easy to have a clear picture of what you have spent for suppliers. 

One of the best ways of overcoming it is to embrace data management technology. You may also focus on process standardization for your company, and it will help in managing the spend data that covers spend data, category information, and supplier data. 

Have a streamlined supply chain and a reliable contract database

It will not be easy to manage several suppliers. Thus, rationalization of the supplier base is one of the vital tasks. The supplier relationship needs to be sustainable at subcategory and category levels.

You must ensure high visibility of commercial terms, contracts, and dates. You will be able to track the loss of working capital. You may choose and segment suppliers very easily. Make sure that you have included 60% of the supplier base in the supplier chain financing programme.

Assess internal systems and processes

The final step is about reviewing your systems and processes. Your systems must have proper alignment with contracts. Your P2P systems must also be functional. However, they have to assist you with your supplier relationship management process.

They will do any modifications to the internal systems and procedures. Your supply chain finance agencies may have strict policies. That is why you must keep your documents signed by the right legal authority. You should also have proper documentation.

In order to maintain the working capital of the company, you can also avail of alternatives like collateral-free business loans and get the funds you need. Leading lenders like Bajaj Finserv offers hassle-free business loans with minimal documents and at affordable rates.


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