What is Supply Chain Finance?
The engine that powers the global economy
Overview
Supply chain finance is an age-old financial need to finance the working capital necessary to run any business. When successfully delivered, it enables corporate buyers to secure inventory by extending payment terms and improves certainty on forward orders for suppliers.
The overall supply chain finance landscape can be roughly differentiated into three segments.
Documentary business: includes traditional off-balance-sheet trade finance instruments such as letters of credit, international guarantees, and banks' payment obligations. These instruments are used to protect the two corporate parties involved in a transaction against potential risks, such as an exporter protecting against country-related risks in its importer's domestic market.
Seller-side finance: includes factoring and invoice financing, which provide financing to corporate sellers by anticipating liquidity related to commercial transactions.
Buyer-side finance: aims at large buyers and their suppliers. It covers the financing needs of suppliers originated by large buyers, such as reverse factoring and dynamic discounting. This segment has traditionally been a smaller and more fragmented market, but it is now growing at double-digits due to increasing interest and new offerings by players.
A Buyer-centric approach - Reverse Factoring
Isle Finance is a novel funding solution to cover the needs of suppliers, originated by large buyers, where suppliers can get financed with crypto through buyer-approved invoices on the blockchain.
The following presents a sample business use case where Nike could utilize Isle Finance to finance its suppliers.
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