Supply Chain Finance: A Silver Lining Amidst Uncertainty
At the onset of the global pandemic followed by worldwide shutdowns and government lockdowns, it’s safe to say that many of us were left in a scramble. That includes small businesses. As the backbone of our economy and the first in line to feel the initial shockwave effects of the crisis, small businesses were scrambling to navigate the substantial supply and demand disruptions. According to a JPMorgan Chase research, median small businesses had only enough cash in reserve to keep them solvent for 27 days.
The unraveling economic chaos left SMEs strapped for cash and many had sought supply chain finance solutions to provide a safety net for their company. This isn’t the first time in history when supply chain finance came to the rescue when the global economy fell apart. During the financial crisis of 2008, supply chain finance earned its stripes by helping businesses to mitigate financial risks and to secure enough capital to protect the overall health of the supply chain.
Supply chain finance is resilient in its very nature and it is designed to bridge gaps within the supply chain so that no matter what is going on internally or externally, recession or no recession, port congestion, or factory closures, the supply chain will remain fluid and in tact. It is a stabilizer. During the COVID-19 pandemic, there was high demand for this kind of reassurance and security.
The strain on working capital as shipping delays increased the time in which cash was trapped in the supply chain and supplier relationships felt the pressure of the economic upset. Small businesses seeking help discovered a weapon to win the war in SCF.
SCF is known as a win win solution for both Buyers and Sellers. Providing end-to-end support, both parties benefit. Like most cases, Buyers want to extend their days payable outstanding, but Sellers on the other hand want to get paid as early as possible. The silver lining? Supply chain finance achieves the impossible by fulfilling both parties requests at the same time. Buyers pay later and sellers are paid early.
At TradeRiver, we deliver customized solutions to ensure that our clients can unlock the working capital they need to fund their business needs despite the complexity of the global trade landscape and the foreseeable supply chain challenges. Discover how a revolving credit facility provides peace of mind to businesses to keep the supply chain moving and business growing no matter the state of disruption. Contact info@traderiverfinance.com to get started today!