Irrespective of the size of a business, finance officers and accountants face the hassle of ensuring continued funding for their ventures. While various on-going and potential projects need funding, a problem arises in deciding their cash source.
Although equity and debt are conveniently available to most major companies, they are time-consuming in nature. Additionally, the reduction in selling assets or capital investment may also prove to be a solution but can disrupt a company’s stable cash flow.
Under such circumstances, CFOs or Chief Finance Officers are looking towards a third option – Supply Chain Finance in the form of business loans from lending organisations.
What Is SCF? What Is Its Significance?
In a nutshell, SCF allows a company to access the unutilised funds stuck in its supply chain. It helps in adding valuable finance to a venture’s working capital, thereby, enhancing the overall production and turnover. SCF is, in fact, emerging to be a key tool in preventing companies against unwanted burnout.
A Chief Finance Officer or CFO can get this fund by:
- Decreasing the sum of payables
- Increasing receivables
- Reducing the stacking of excess inventory
Supply Chain Financing creates a win-win situation for both suppliers and buyers. It works by extending the payment terms and clauses to their suppliers. Simultaneously, it allows SME suppliers to receive early payments.
In fact, today, accessing funds have become more convenient with business loans from reliable companies such as Bajaj Finserv. Additionally, Bajaj Finserv comes with pre-approved offers on home loans, personal loans, business loans and other financial services and products.
Pre-approved offers not only save considerably on time but also make the process of availing funds easier. All one needs to do is enter a few basic details of their company and check out their pre-approved offers.
Technology and SCF – an Interdependent Bond
It has been almost a couple of decades that SCF made its presence felt in the global arena. However, the real change came with the infusion of cloud into SCF platforms. While cloud made SCF storage capabilities limitless, it brought about three significant changes:
- Effectiveness
- Efficiency
- Convenient launching options
Let’s dig deeper into each one of them.
1. Effectiveness (the primary key):
With the incorporation of Supply Chain Finance, participating companies seek more transparency with their suppliers. Invariably, this is resulting in better cash liquidity and a stronger bond between companies and their suppliers.
2. Efficiency at its peak:
While initial days saw only the top suppliers becoming a part of the supply chain, today, this capability extends to all participating hands with collateral-free business loans. As a result, companies can extract finances effectively; thus, increasing their overall working capital.
3. Launch convenience:
Source financing options are receiving a marketplace via cloud platforms, and hence, offering more value to companies. Additionally, the presence of comprehensive analytics is also helping in attaining effective supply chain optimisation.
What Are the Features of Supply Chain Finance?
While renowned financial companies are coming with useful SCF options, it is imperative to know about their features beforehand.
a) Considerable lump sum:
Now, get financing up to Rs. 30 Lakh and serve your financial deficiencies. Moreover, you can also get raw materials or re-stack your inventory. This will, in turn, help you save on your venture’s working capital.
b) Approval in 24 hours:
Eminent financing companies will sanction and approve a Supply Chain Finance within 24 hours. So, get access to your fund requirements at the earliest.
c) Flexible loan repayment options:
With supply chain financing, borrow what is required and pay interest only on the utilised amount. Moreover, choose to pay the interest amount as EMI and repay the entire principal amount at the time of loan closure.
Other than the above facilities, applicants also get the opportunity to monitor their business loan accounts via an online portal.
Talking of eligibility criteria, a person should be ageing from 25 to 55 years in addition to being an Indian resident. Moreover, a business vintage of three years is mandatory. Last but not the least, your firm must have its income tax filed at least for the previous year.
Business loans as Supply Chain Finance are emerging as solutions for accessing the locked financial assets of a company. Proper utilisation of this amount can aid a company in witnessing a much higher annual turnover.
