Supply Chain Finance (SCF), also known as Reverse Factoring, is a powerful financial solution designed to optimize cash flow for every participant in a transaction. Unlike traditional factoring, where a supplier sells its receivables based on its own creditworthiness, SCF is a buyer-led program that leverages the buyer's stronger credit rating to benefit their entire supply chain.
At Firmroot Capital, we structure and manage SCF programs that strengthen the relationship between our clients (the buyers) and their strategic suppliers, creating a more resilient and efficient commercial ecosystem.
The process is streamlined for simplicity and efficiency:
Program Setup: We work with you (the buyer) to establish an SCF program and invite your key suppliers to participate.
Invoice Approval: Your supplier submits an invoice to you as per the normal process. You verify and approve the invoice for payment.
Early Payment Option: Once approved, the invoice is made available on our platform. Your supplier is automatically notified and given the option to receive immediate payment from us (minus a small, transparent discount fee).
Supplier Is Paid: If the supplier chooses the early payment option, we transfer the funds to them, often within 24-48 hours.
Final Settlement: You pay Firmroot Capital the full invoice amount on its original due date (e.g., 60, 90, or 120 days).
Optimize Working Capital: Extend your payment terms (DPO) to improve your cash conversion cycle without putting financial pressure on your suppliers.
Strengthen Supply Chain: Build loyalty and reduce the risk of disruption by providing your suppliers with access to affordable, reliable financing.
Improve Margins: The financial stability you offer your suppliers can be leveraged to negotiate better pricing and terms on goods and services.
Automate Processes: Streamline your payables process through a simple, technology-enabled platform.
Accelerate Cash Flow: Suppliers can convert their receivables to cash in days, not months, drastically improving their liquidity.
Reduce Borrowing Costs: They access financing at a much lower rate based on your stronger credit rating.
Gain Financial Certainty: Predictable cash flow allows suppliers to better manage their inventory, payroll, and growth investments.
