GLOSSARY
Supply Chain Finance
Umbrella term for techniques that finance the working capital trapped between a buyer's payable and a supplier's receivable. In B2B usage, almost always shorthand for reverse factoring.
Supply chain finance (SCF) covers any structure that lets a supplier get paid earlier or a buyer pay later by inserting a third-party funder. The most common form, reverse factoring, uses the buyer's stronger credit to lower the supplier's cost of capital — when a Tier-1 buyer says "we offer SCF," they almost always mean this.
Why it matters
SCF lets a supplier convert a payable into cash within days of invoice approval, often at the buyer's borrowing rate rather than the supplier's. For a Vietnamese contract manufacturer selling to a US retailer on net-90 terms, that's the difference between covering payroll and not.
Related terms
- Reverse Factoring
- Approved Payables Finance
- Dynamic Discounting
- Factoring