The strategic value of Supply Chain Finance: Beyond funding

SCF is a strategic tool that goes beyond mere funding. It optimizes the supply chain, drives growth, and strengthens business relationships, creating a more efficient and resilient ecosystem.

Within today's dynamic business world, supply chain optimization has become a key factor for success. Supply Chain Finance (SCF) emerges as a strategic solution that offers a wide range of advantages, both financial and operational, with the aim of strengthening companies and fostering stronger business relationships.

Its ability to inject liquidity, improve risk management, and foster collaboration between different actors in the supply chain makes it an essential tool for any company competing in today's globalized marketplace.

SCF translates into an injection of liquidity for companies, optimizing working capital and generating new growth opportunities. By freeing up capital trapped in outstanding invoices and payments, businesses access financial resources ahead of schedule. This allows them to face unforeseen events, invest in strategic projects, such as expansion into new markets or the modernization of their infrastructures; and take advantage of market opportunities that might otherwise be missed.

This improvement in cash flow is particularly beneficial for small and medium-sized enterprises (SMEs), which often face greater restrictions on access to credit. In the words of Marina Andrés, Global Head of Advisory Global Transaction Banking at BBVA: "SCF provides a flexible source of financing, linked to their business operations, without increasing their financial debt, allowing them to invest in their growth without compromising their stability."

Beyond the financial impact, SCF transforms the relationships between companies and suppliers, creating a more collaborative and efficient ecosystem. By streamlining payments, buyers strengthen their relationship with suppliers, demonstrating their commitment and generating a climate of trust.

This improvement in trade relations translates into greater stability in the supply chain, crucial in a globalized and interconnected environment, where disruptions can have very decisive consequences. In addition, SCF provides greater agility in the management of cash flows, allowing companies to adjust their payment and collection times to adapt to market fluctuations and internal changes in their organization.

For Andrés, "this financial flexibility becomes a key tool for risk management and adaptation to a business environment that is constantly evolving. By having a more robust and predictable supply chain, companies can optimize their production processes, reduce lead times and improve customer satisfaction."

Supply Chain Finance benefits for buyers and suppliers

SCF not only benefits buyer companies, but also offers significant advantages for suppliers. First, if we focus on buyers, SCF strengthens their supply chain by ensuring the financial stability of their suppliers, which translates into a lower risk of disruptions and a greater responsiveness to demand. In addition, it optimizes their working capital and cash flow by extending payment terms, allowing them to better manage their resources and ensuring greater financial flexibility.

Second, suppliers benefit from reduced collection periods, which improves their liquidity and allows them to meet their own financial obligations more easily. Access to cheaper financing (the discount rate is based on the buyer's credit rating) is another key advantage. In addition, SCF improves their working capital, reduces their risk by selling non-recourse receivables and does not consume their credit lines, which gives they greater leeway to finance their own operations and invest in their growth.

The integration of digital platforms and the use of technologies such as blockchain are transforming the way financial transactions are managed in the supply chain, increasing efficiency, transparency, and security. These innovations are opening up new possibilities for SCF, such as process automation, cost reduction, and improved access to funding. As Alejandra Alcalde, Head of Global Sales Supply Chain Finance points out, "digital champions are the ones that set trends and have the best practices in the market. Companies that use technology to their advantage to efficiently manage working capital are the ones that become leaders. In times of crisis and uncertainty, companies are once again focusing on liquidity while demanding solutions that ensure the management of their payments and collections at a global level. And these solutions, today, are completely digital."