2 min read
Definition
Supply chain finance is a buyer-led arrangement where a financier pays a company's suppliers early, and the company repays the financier later. It lets suppliers get paid sooner while the buyer keeps or extends its own payment terms — smoothing cash for both sides of the chain.
In plain terms
A large buyer sets it up so its approved invoices can be paid early by a financier at a low rate based on the buyer's credit. Suppliers gain faster cash; the buyer gains longer effective terms. Also called reverse factoring.
Why it matters
It is most common in larger supply chains but the principle — using finance to align payment timing — applies widely. See reverse factoring and trade finance.
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