Managing A Business's Working Capital Needs With Its Suppliers
Managing a business's working capital needs with its suppliers is at the core of every successful Supply chain finance program. It benefits both parties , buyers and suppliers. Buyers are generally focused on extending their days' payables outstanding ( DPO) . At the same time, suppliers would prefer to get paid as soon as possible to minimize the number of days sales are overdue (DSO). This dilemma can be resolved through supply chain financing, which offers buyers and suppliers several advantages. By allowing the customer to extend its payables and simultaneously accelerate payment to the supplier, fintech businesses help both the buyer and supplier increase their working capital. Both parties gain from this, as there is more liquidity and less fluctuation in the timing of payments. With SCF, buyers consent to give a bank or other external financier permission to finance their suppliers' bills leveraging buyers’ credit worthiness . Additionally, SCF offers...