Supply chain finance for importers

17 April 2018

Availability of working capital is important for importers, but at the same time, it is complicated. As a freight forwarder, we understand only too well that financing problems often occur in the chain. That is why we are keen to explore solutions with clients in the form of supply chain finance. That way, you can limit your financial hindrances and have more working capital available for your company.

What is supply chain finance?

Supply chain finance is the generic term for various different types of financing between parties in the production chain. This way, financial streams in the chain can be optimized. Supply chain finance is used widely in global commerce.

An example of supply chain finance is the financing concept of ‘reverse factoring’. It entails an importer entering into an agreement with a financial party. This party pays the invoices the importer receives from the supplier up front. The importer then pays the sum owing back to the financial party within an agreed term. That way, suppliers are paid more quickly, while importers have working capital available.

Visual representation of ‘reverse factoring’

What are the advantages of supply chain finance?

Supply chain finance offers numerous advantages. Firstly, supply chain finance ensures there is less demand on working capital. As it happens, the invoices for the goods are paid up front by the financial party. In turn, importers can invest the funds that have been ‘released’ in the growth of the company, for example, by placing new orders with suppliers.

At the same time, supply chain finance is a more advantageous means of financing, because it is provided based on the importer’s creditworthiness. Sufficient equity results in a favorable credit rating, which makes financing cheaper.

In short, supply chain finance adds value for all participating parties. However, clear agreements need to be made before this can be put in place. In addition, effective partnership, mutual trust and openness are absolute conditions for successful supply chain finance.

Ritra Cargo advises on supply chain finance

The control of worldwide goods and data streams is something in which Ritra Cargo has many years’ experience. Thanks to good relationships with financial parties and our role as a freight forwarder, we can now also support you in terms of your financial streams and advise you on supply chain finance solutions. That way, you can focus on the further growth of your business.

More information?

Curious about the option of supply chain finance for your business? Then get in touch with your Ritra Cargo point of contact.