Supply Chain Finance (SCF): Optimizing Working Capital

Supply Chain Finance (SCF), often executed through a mechanism called Reverse Factoring, is a set of technology-driven business and financing processes that link a buyer, a supplier, and a finance provider (bank or funder) to lower financing costs and improve working capital efficiency for all parties.

Unlike traditional factoring, which is initiated by the supplier, reverse factoring is initiated by the buyer to support their key suppliers.

I. How Reverse Factoring Works

The process is built around the buyer's creditworthiness, which is typically stronger than that of the supplier. This allows the supplier to access cheaper capital.

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