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How to Build a Resilient Supplier Finance Program in 2023: Digitizing the Process

Build Resilient Supplier Finance Program 2023: Digitizing Process

By: LiquidX

Supplier finance has proven advantageous to corporates and banks alike. Buyers are able to extend payment terms, and suppliers can access lower interest rates and better control their cash flow. Banks get opportunities to boost revenue.

However, trade finance is not without its challenges as 2023 has shaken things up. Changes include FASB now mandating supplier finance disclosure on company financial statements, as well as central banks raising their rates multiple times. June marked the first time since March 2022 that the Federal Open Markets Committee left the federal funds target rate unchanged. The Fed has spent the past 14 months trying to bring inflation down without triggering a recession. Yet concerns of a looming liquidity crisis still remain.  

This lasting volatility will leave its mark on emerging and developing economies, and limit access to liquidity for businesses. Companies will need to build up liquidity reserves and increase operating cash flow to grow their businesses. They’ll need to realign their operations, make better decisions and reduce financial risk. To do so, savvy business leaders will continue to turn to supplier finance.

Supplier Finance Creates Stability Among Uncertainty 

Supplier finance is more affordable than other forms of liquidity and improves working capital and cash flow for both buyers and suppliers. It enables companies to extend payment terms by offering suppliers an early payment option at the buyer’s cost of capital. 

Since the pandemic hit, supplier finance and early payment solutions have been providing necessary cash to corporates as they’ve suffered from demand fluctuations, nagging supply chain shortages, inflation and geopolitical dynamics. 

In addition to providing resilience among the turmoil, supplier finance helps give companies a competitive edge. By unlocking liquidity in the supply chain, companies can pursue mergers and acquisitions, as well as accelerated R&D.

Get More Out of Supplier Finance By Digitizing the Process

The tides have been shifting to a more digital-focused world. As a result, financial institutions are increasingly partnering with fintech companies to be competitive in customer offerings. 

Digitization of supplier finance programs streamlines operations to tap into a myriad of benefits. It eliminates the operational challenges of relying on manual processes and helps businesses increase functionality and scalability. It also offers transparency and real-time, actionable data for cash forecasting.

Digitized Solutions to Streamline Trade

Digitization has revolutionized trade procedures, bringing innovative software to the market. LiquidX’s Trade is a complete front-office trade finance solution to originate and distribute transactions. Eliminating manual processes eliminates errors and saves time, opening up opportunities for businesses to prioritize higher value objectives and goals. 

From a single bilateral transaction to complete and complex multi-funder transactions, digitizing tools like Trade provide onboarding with KYC requirements and legal documents, and support programs structured as true sale or financing. Banks can sell an AR/AP platform to their corporate customers to either build their own system, white label it, or co-sell it with another platform. 

LiquidX’s comprehensive technology gives our customers the control over their supply chain solutions that they’re looking for. Trade offers a transparent view of a supplier finance program from the top down, enabling smarter decision-making, opportunities to scale and innovative workflows. Our software empowers corporates to manage their cash flow and liquidity across working capital solutions. 
Digitized trade finance solutions help individual companies, but are also critical to supporting overall global trade recovery as we navigate what’s to come the rest of the year and beyond. To learn more about LiquidX’s industry-leading turn-key software, request a demo.