What is Supply Chain Finance and what are Its Benefits for Small Businesses?

Supply chain finance is a way to raise funds by collateralizing your accounts receivables. It is a very short-term model of business finance and the loan period usually lasts till the invoice due date. The financier reserves the right to provide a loan based on the credibility of your business and its customers. The amount of advance given is generally less than the value of the invoice submitted as collateral, however, certain supply chain finance services like LivFin also provide small business loans up to 100% of the invoice value.

However, there are certain conditions which you need to satisfy for getting supply chain finance from LivFin, such as:

  • Commercial customer/s
  • Registered Business Entity
  • Invoices with a tenure of 30 to 180 days
  • Business Vintage of 2 years or more

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The finance is provided without flexible repayment terms to enable business expansion for small business owners. Also, there are no pre-closure charges for supply chain finance provided by LivFin.

You pay a small processing charge and interest on the loan gotten through invoice finance services and in return reap the benefits of immediate funds for working capital and operations.

Benefits of Supply Chain Finance for small businesses

  1. It allows you to raise quick cash in exchange for client-approved invoices, making it one of the fastest ways to raise business finance.
  2. Rate of interest on supply chain finance is generally 1.5% to 3% above the base rates in the market but the very-short repayment terms mitigate the overall credit impact.
  3. There is usually a processing charge as well which can range from 0.2% to 0.5% of the turnover, but again the operational benefits of getting paid early, make it insignificant in comparisons.
  4. While supply chain finance may reduce your profits in the short-term, it allows you to offset that loss by creating newer business opportunities.
  5. Supply chain finance is a great way to streamline you cash flow, helps in creating goodwill in the market and gives your business a good credit rating in the long-run.

So, are you ready to make a positive change to the way you do business? Enquire now for a supply chain finance offer at care@livfin.com. To know more about supply chain finance and invoice discounting, visit us at www.livfin.com.

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