Capital is the key to successful business growth. Here, Farah Khalique offers some indispensable tips on how to onboard a supply chain finance programme and free up capital as smoothly as possible.
Freeing up capital to grow your business is top of the wish list for many businesses; hence the growth in 'supply chain finance'. This catch-all term has been around for decades and means any financial solution that optimises working capital, but the concept is really catching on as traditional lenders become more cautious.
Invoice discounting is the best-known solution - a company can sell its invoices to a third party, like a bank or a fintech provider for immediate payment in return for a fee. The third party then chases payment. It beats waiting up to 30 days or more for payment and helps to stimulate cash flow. Unpaid invoices also become someone else’s headache.
Signing up to a supply chain finance solution can be done in as little as 24 hours, if done properly. Read our top three tips on how to onboard a supply chain finance programme as smoothly as possible and quickly free up business finance:
1. Figure out what you want.“Is it just a short-term payment-days benefit project or a long-term working capital improvement programme?” says Gopal Iyer, sourcing and supply chain consultant at 4C Associates. “This stage can be time consuming, but supply chain finance is much better understood than in previous years. Work out which is the right solution for your business.”
2. Get the KYC and AML right. “Know-your-customer and anti-money laundering checks are two requirements to prove that you are a legitimate business. Some supply chain finance providers are more demanding than others,” says Matt Wreford, chief executive officer at working capital solutions expert, Demica. “It has intensified at certain banks, but is a necessary evil.
The key to passing this stage with flying colours is to read the requirements carefully and submit the right documents, such as certifications of incorporation.”
3. Make sure that any signed documents have been signed by people with the legal authority to do so, otherwise they could be contested and delay the onboarding process. "A nice folder of documentation is the best way to get onboarded quickly," says Wreford. “Where possible, see if you can supply an e-signature for any paperwork. This is quicker than having to courier over original signed documents.”
