Supply chain financing: An effective way for development banks to support small entrepreneurs
Weaving factory in Cambodia, 2018. Photo: Chor Sokunthea / IFC
All businesses need financing either for investment or as working capital for daily operations. Working capital is employed to purchase the input materials for production, to finance inventory, and to bridge the time until customers pay their invoices. That’s why access to suitable instruments to manage working capital requirements is key in global efforts to reduce the finance gap for small and medium-sized enterprises.
Due to its unique structure, SCF enables suppliers to larger customers to receive faster payment of invoices raised via a finance facility that is supported by using the strength of the buyer’s business as security for the lender, making it a win-win situation for all parties.