Yubi – Supply Chain Finance

Supply Chain Finance solutions by Yubi!

What is Supply Chain Finance?

Liquidity is the lifeblood of a business. To run a successful business, it is essential to maintain a steady flow of funds. When a company sells goods on credit, the money gets blocked until the payment is received. Usually, this gap is around 1 to 6 months. This means that the business needs to invest additional funds every time it sells its product or services, which is often not feasible.

On the other hand, Supply Chain Finance (SCF) allows the suppliers to get their invoices discounted from a bank. But, this arrangement can be made only if the buyer satisfies the credit rating criteria and has the required cash flow threshold or is a large corporation that has goodwill in the market. Such a buyer is called the supply chain finance anchor. It is important to note that supply chain finance is not given in the form of a loan. Instead, it is linked to the discounting of bills so that businesses can maintain liquidity.

Benefits of Yubi’s Supply Chain Finance solutions

The model for supply chain finance in India is based on mutual benefit for the buyer and the supplier.
Here are the major benefits of this arrangement for both the buyers and the suppliers.

Benefits for the Supplier:

The revenue from the sales is received as soon as the anchor approves the invoice.

Due to the reduced waiting time, the business’s funds are not blocked.

The business can earn more revenue by increasing its turnover.

The charges deducted by the bank for bill discounting are minimal. Hence, it results in much more cost savings than a business loan.

Benefits for the Buyer:

The buyer doesn’t have to pay the invoice amount upfront. This reduces the need for liquidity for the anchor.

The buyer has to pay only the invoice amount. No extra amount is charged.

The goodwill of buyers is enhanced as banks allow bill discounting for their suppliers.

How does Supply Chain Finance Work?


A typical Supply Chain Finance includes three parties: the buyer/anchor, the supplier, and the bank. But with the development of technology, a Fintech firm is also included as the fourth party to facilitate the transactions digitally. So, here is the process of supply chain finance.

The anchor must be a reputed or a large corporation for the banks to allow bill discounting.

Both the buyer and the supplier have to register themselves on the online fintech portal for trade and supply chain finance.

The record of each invoice has to be uploaded separately.

The buyer has to approve the invoice on the online portal.

The bank pays the invoice amount as soon as the bill is approved.The amount is paid after deducting a small charge for the facility.

At the invoice’s due date, the buyer has to pay the bill amount to the bank instead of the supplier.

Why is Supply Chain Finance for You?

You can easily manage your business’s funds using supply chain finance. The bill discounting will fill the essential working capital gap enabling your business to run smoothly. With the improvement in technology, Fintech firms have joined the arrangement, and they can facilitate the process of supply chain finance by providing technical solutions.

Here are the additional benefits that you can enjoy by applying for a supply chain finance arrangement with YubiFlow

Automated Invoice Processing:

This facility helps you manage the invoices raised and approved using the online platform. It enables end-to-end processing powered by blockchain technology.

 

Core Banking Integration:

The banking system is integrated through the online portal to manage payments and dues in real-time.

 

Early Warning Signals:

The most important part of supply chain finance is to meet the due dates. The software will provide early warning signals for all the dues.

Anchor Onboarding Tool:

This tool makes it easy for the suppliers of the anchor to register online and raise the bills.

 

Multiple Banking Options:

Unlike a business loan, you can choose a different bank for every invoice based on the charges.

FAQs

Who is a Supply Chain Finance Anchor?

It is a large corporate or an established company with a significant market reputation and honors its dues on time.

 

Is the meaning of Supply Chain Financing the same as a loan?

Supply Chain Financing is the process of discounting the bills payable by the bank so that the working capital gap can be filled. The suppliers to an anchor can raise their invoices and receive money as soon as they are approved. Hence, it is completely different from a loan.

Do you need to train your employees for Supply Chain Finance?

With the help of Fintech solutions, the process of Supply Chain Finance has become very easy. You do not need any specialization for the same. A basic understanding of software is enough to conduct the transactions.

 

How do banks benefit from Supply Chain Finance?

The banks get multiple benefits from supply chain financing. They receive the discount charged from the suppliers, which becomes feasible due to the scale of the business. Additionally, they can cross-sell their products to the suppliers of the anchor by onboarding them to other banking solutions.