Supply chain finance is also called reverse factoring or supplier finance. This set of technology-based solutions shares some similarities with invoice finance. But the main point is that it aims at optimizing the cash flow in two ways;

  1. It facilitates the businesses to lengthen their payment terms.
  2. It allows small businesses to take maximum benefit from the higher credit scores of their buyers.
  3. It improves the efficiency of the business for the buyers and sellers.

One of the main features of Supply Chain Financing Malaysia is that buyers instead of sellers set it up. Moreover, it allows the suppliers to easily access supply chain finance at a funding cost based on the buyer’s credit rating.


How does supply chain finance work?

SME Funding Malaysia works best when the buyer’s credit rating is better than the seller’s.

  1. The process usually begins by sending the invoice. The buyer acquires an invoice from the supplier.
  2. In the second step, the buyer needs to confirm to the supplier whether the invoice is approved for payment or not.
  3. Supplier requests for early payment on the invoice.
  4. The supplier will directly receive the desired funds in his bank account. A small fee is deducted from the received amount.
  5. The buyer pays the full amount to the funder on the due date.

As a result, this strategic approach plays an important role in stabilizing the supplier’s cash flow. The supplier can opt for being paid early without waiting for 120 days.


Cost of Supply Chain Financing Malaysia

One of the key characteristics of supply chain financing Malaysia is that the supplier only pays a small fee if they want an early payment.

For the buyer, the process is quite simple and easy. Buyers are not charged any fee, making the financing much more favorable.


Who benefits from Supply Chain Financing Malaysia?

Supply Chain Financing Malaysia is used in various sectors, including electronics, retails, automotive, etc. It benefits both the trading partners equally. It aims to help both the buyers and suppliers in their needs and make the payment process easier.


Benefits of Supply Chain Financing Malaysia

SME Funding Malaysia equally benefits both the suppliers and buyers by stabilizing cash flow. Besides this, here are a few benefits of SCF;

  • Less waiting time

One of the greatest benefits of the SCF is that it reduces the long waiting time. The suppliers do not need to wait for long and usually get paid within a few days.

  • No stress

The suppliers do not get any pressure from the buyers, despite extensions in payment terms.

  • Best choice

SCF is a joined process that positively affects the buyers and suppliers, making it the best choice for the majority of the people.

  • Improving the working capital

It helps the buyers in optimizing their working capital.

  • Better relations

It also helps build and promote friendly relations between the buyers and suppliers.