Supply Chain Finance enables procurement and treasury teams to improve working capital through negotiating an extension of payment terms with suppliers, while offering suppliers the ability to take immediate payments on approved invoices. The working capital released can be used for any purpose including funding acquisitions or reducing bank debt, ultimately improving financial ratios and company valuations. Establishing a Supply Chain Finance solution will provide suppliers additional liquidity which can greatly improve the relationship between the buyer and supplier.
Supplier motivation for joining programmes vary. For suppliers of investment grade companies, the very low cost of funding is highly attractive. For suppliers to non-investment grade firms the motivation is often to minimise their credit exposure and hence be in a position to sell higher volumes of goods at a lower risk.
Funding is usually sourced from our clients’ relationship banks, with global programmes being syndicated on our multi-funder platform, enabling the financial institution that is best positioned to onboard suppliers in each jurisdiction to be selected.
Demica has broad and extensive experience in establishing Supply Chain Finance solutions in various formats, including SPV structures. Following Demica’s selection in 2017 as the platform to power FCIreverse on behalf of FCI’s 400 bank and independent factoring members, Demica has established the most comprehensive funding network in the market: FCI has members in 90 countries.
Making supplier onboarding easy is critical to success. Demica has a unique online collaborative platform that allows the buyer, funder and supplier to work together. Online marketing and self-onboarding enables us to efficiently onboard hundreds of suppliers onto our clients’ programmes.
“Demica have built a highly robust and reliable platform that supports the most complex of supply chain finance programmes. Demica's expertise and understanding of our business needs are exactly what we look for in a business partner.”
“Demica's technology is amongst the most sophisticated and flexible in the SCF industry.”
Senior Director, Supply Chain Finance - Working Capital Solutions
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