Channel financing
Channel financing provides working capital to all the key players in a supply chain, from manufacturers to distributors and retailers. This helps maintain a smooth flow of goods and services while ensuring that all participants have enough liquidity.
How it works in detail:
• Step 1
A supplier delivers goods or services to a buyer and raises an invoice.
• Step 2
A financial institution steps in and advances funds to the supplier against the invoice. This ensures that the supplier is paid early.
• Step 3
The buyer eventually pays the financial institution on the invoice due date.
• Step 4
The supplier receives full payment and the financial transaction is settled.
Channel financing strengthens the entire supply chain by ensuring that each participant has enough liquidity to continue operations without cash flow interruptions.