Business benefits for Buyers’ using BSCF:
- Additional working capital, cash flow gains and shareholder value added
- Opportunity to increase payment terms (à better cash position)
- Increase in sales and enhance supplier relationships
- Off-balance sheet financing (trade payable, not bank financed)
- Costs will be taken by suppliers
- Reduce operational costs due to streamlined processes
Business Benefits for suppliers using BSCF:
- Additional working capital, cash flow gains and shareholder value added
- Get cash earlier to pay its suppliers
- Change short-term receivables into liquidity
- Alternative financing of delivery period
- Does not affect line of credit
- Favorable financing/interest rates
- Opportunity to offer longer payment terms
Business Opportunities for the Bank
- Large market with good growth potential: Supplier finance opportunities exist in multiple sectors, including: Schools, FMGs, Logistics, Hotels, Retail Chains, Health Insurance, Hospitals, Pharmaceuticals, Manufacturing, Security, Petroleum, Airlines Construction, sugar, coffee, fruit, vegetables, and flowers.
- Improved credit risk: Supporting suppliers to implement best practice and governance standards will enhance risk management, operational efficiency, and increased profitability, reducing financial liabilities the bank.
- Attractive financing niche: Supplier demand for finance is already there and the involvement of buyers reduces collateral risk, which further enhances the attractiveness of these deals.
- Improved customer service: Finance is essential to help suppliers produce a better quality product that meets buyer eligibility requirements. Benefits for the Bank come from building competitive supplier businesses, which adds to portfolio returns.
- Provision of efficiency gains among clients to create growth potential, leading to an expanded need for banking services.
- Market differentiation: Banks well-acquainted with the specificities of the sustainable supplier market and offering value-adding financial services in this area can extend their market reach in a highly competitive SME market.
- Increased brand value: The Bank can enjoy the reputational benefits of supporting businesses with high operating standards among policymakers, investors, and customers.
- Very Profitable: Lending to corporates at a rate more than on traditional lending and at the same time lending to SMEs the bank would otherwise not have lent because of their poor credit quality.