Notice. This page is informational and general in nature. Any mandate remains subject to KYC and AML checks, sanctions screening, legal review, underwriting, and final third-party approvals.
Supply Chain Finance Solutions
Most working capital problems in trade are not caused by unprofitable businesses. They are caused by timing mismatches between when suppliers need to be paid and when buyers are ready to pay. Supply chain finance solves that mismatch without requiring either party to compromise their cash position.
FG Capital Advisors advises on supply chain finance programme design, provider selection, and facility structuring for buyers and suppliers operating across domestic and cross-border trade flows, including in emerging and frontier markets where standard SCF providers do not typically operate.
Get StartedHow SCF Benefits Both Sides of the Trade
A well-structured supply chain finance programme creates working capital headroom for buyers and liquidity access for suppliers simultaneously, without requiring either party to renegotiate payment terms adversarially.
- Extend days payable outstanding without damaging supplier relationships.
- Free up working capital that would otherwise be tied up in early supplier payments.
- Strengthen supplier loyalty by giving them access to low-cost early payment.
- Consolidate fragmented supplier payment processes into a single managed programme.
- Improve supply chain resilience by reducing the financial stress on key suppliers.
- Potential balance sheet benefits depending on programme structure and accounting treatment.
- Access early payment on approved invoices without waiting for the buyer's standard payment date.
- Finance cost based on the buyer's credit rating rather than the supplier's own profile.
- No need to negotiate individual credit facilities with a bank independently.
- Predictable, on-demand liquidity to fund the next production or procurement cycle.
- Reduced dependence on overdrafts, factoring, or expensive short-term borrowing.
- Straightforward onboarding through the buyer's programme without separate underwriting.
Supply Chain Finance Structures We Advise On
| Structure | How It Works | Initiated By | Best Suited For |
|---|---|---|---|
| Approved Payables Finance (Reverse Factoring) | Buyer approves invoices on a platform. Suppliers elect to receive early payment from a financier at a rate based on the buyer's credit. Buyer repays financier on the original due date. | Buyer | Buyers with large supplier bases seeking to extend payment terms while offering suppliers early payment access. |
| Receivables Purchase / Factoring | Supplier sells approved trade receivables to a financier at a discount and receives immediate cash. The financier collects payment directly from the buyer on the due date. | Supplier | Suppliers seeking to accelerate cash conversion without waiting for buyer programme approval or platform onboarding. |
| Dynamic Discounting | Buyer uses its own cash to offer suppliers early payment at a sliding discount rate that decreases as the invoice due date approaches. No third-party financier involved. | Buyer | Cash-rich buyers who want to deploy surplus liquidity to earn a return while reducing supplier financing costs. |
| Inventory Finance | A financier advances funds against goods held in a warehouse or in transit, releasing working capital that would otherwise be locked in stock. | Buyer or Trader | Companies with high inventory carrying costs or long stock-to-sale cycles needing to free up capital between purchase and sale. |
| Distributor Finance | A manufacturer or large supplier extends financing to its distribution network to enable distributors to purchase more stock without straining their own working capital. | Supplier or Manufacturer | Manufacturers seeking to grow distributor sales volumes without absorbing the credit risk of extended payment terms on their own balance sheet. |
| Pre-Shipment Finance | Finance extended to a supplier before goods are produced or shipped, enabling the supplier to procure raw materials or fund production based on a confirmed purchase order. | Supplier | Exporters or manufacturers with confirmed orders but insufficient working capital to fund production ahead of shipment. |
Supply Chain Finance vs Letters of Credit
Both tools improve working capital in trade, but they serve different purposes and are suited to different stages of the buyer-supplier relationship. Understanding which is right for your situation is part of what we do at intake.
| Supply Chain Finance | Letter of Credit | |
|---|---|---|
| When it applies | After goods are delivered and invoice is approved by the buyer. | Before or at delivery, triggered by presentation of shipping documents. |
| Relationship requirement | Best suited to established, recurring buyer-supplier relationships. | Suited to new or unfamiliar counterparty relationships where payment certainty is needed. |
| Payment certainty | Supplier receives early payment voluntarily by electing into the programme. | Supplier is guaranteed payment upon presentation of compliant documents, regardless of buyer cash position. |
| Credit basis | Financing cost based on the buyer's credit rating. | Issuing bank's credit standing backs the payment obligation. |
| Complexity | Lower operational complexity once the programme platform is set up. | Higher documentary complexity per transaction, with strict compliance requirements. |
| Best use case | Recurring domestic or cross-border trade with trusted counterparties. | One-off or high-value cross-border transactions with new or less familiar suppliers. |
What We Do For Clients
We assess your trade flows, supplier base, payment terms, and working capital objectives to design the right SCF structure before any provider is approached.
We identify banks, fintech SCF platforms, and non-bank providers with the right appetite for your buyer credit profile, geography, and programme size.
We structure SCF solutions for trade flows in Sub-Saharan Africa, the Middle East, and Asia where standard SCF providers do not typically operate, addressing currency, legal, and counterparty considerations.
We build the provider submission package to the required standard, covering buyer financials, trade flow data, supplier base analysis, and KYC and AML documentation.
We advise on pricing, advance rates, eligible invoice criteria, platform fees, and programme covenants through to agreed heads of terms with the chosen provider.
We support through programme launch, covering documentation execution, supplier onboarding coordination, and first transaction confirmation to ensure the facility goes live without delay.
Process From Intake To Live Programme
- Trade Flow and Working Capital Review Assess buyer-supplier payment dynamics, invoice volumes, existing facilities, and working capital objectives for both parties.
- Structure Selection Identify the right SCF structure, whether approved payables finance, receivables purchase, dynamic discounting, or an alternative, based on the specific situation.
- Provider Shortlisting Match the programme to banks, platform providers, or non-bank SCF financiers with the right geography, sector, and credit appetite.
- Submission Pack Build Prepare the credit and programme file, covering buyer financials, trade flow data, supplier base overview, and compliance documentation.
- Term Negotiation Support pricing, eligibility criteria, and programme covenant discussions through to agreed terms with the provider.
- Documentation and Launch Assist with facility agreement execution, platform setup coordination, supplier onboarding, and first transaction to confirm the programme is operational.
What To Submit For A Review
- Overview of the buyer-supplier relationship, including trade volumes, invoice frequency, and current payment terms.
- Corporate financials for the anchor buyer, including audited accounts and recent management accounts.
- Summary of the supplier base, including number of suppliers, geographies, and any concentration considerations.
- Details of any existing trade finance, working capital, or credit facilities currently in place.
- Target programme size, preferred structure, and any specific working capital objectives.
- Full KYC and AML package for the company and all beneficial owners.
Why SCF Programmes Stall or Are Declined
- The anchor buyer's credit profile is too weak to support a financier taking on the payment risk.
- Invoice volumes are too low to justify the operational cost of a formal programme platform.
- The buyer's jurisdiction or sector falls outside the provider's risk appetite.
- Invoice assignment is legally restricted or unclear under local law in the relevant market.
- Supplier onboarding is poorly planned and adoption rates are too low to make the programme viable.
- The buyer has existing debt covenants that restrict off-balance-sheet payables arrangements.
- KYC or beneficial ownership documentation is incomplete, delaying provider approval.
Frequently Asked Questions
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Supply chain finance (SCF) is a set of technology-enabled financing solutions that allow buyers and suppliers to optimise working capital by accelerating or extending payment timelines. The most common form is reverse factoring or approved payables finance, where a financial institution pays a supplier early against a buyer-approved invoice, and the buyer repays the financier on its standard payment terms. This allows suppliers to receive early payment without the buyer having to pay earlier, improving working capital for both parties.
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A letter of credit is a bank instrument that guarantees payment to a supplier upon presentation of compliant shipping documents, typically used for cross-border trade where the buyer and supplier do not have an established credit relationship. Supply chain finance operates on approved invoices after goods have been delivered and accepted, making it suitable for ongoing supplier relationships with predictable payment flows. LCs provide payment certainty before or at delivery; SCF provides liquidity acceleration after invoice approval.
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SCF programmes benefit both buyers and suppliers. Buyers can extend their days payable outstanding without damaging supplier relationships, freeing up working capital for other uses. Suppliers, particularly smaller ones that may not have access to cheap credit independently, can access early payment at a financing cost based on the buyer's stronger credit rating rather than their own. The programme is most effective when the buyer has a strong credit profile and a large, fragmented supplier base with varying payment terms.
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In reverse factoring, the programme is initiated by the buyer, who approves invoices on a platform and invites its suppliers to access early payment from a financier at rates based on the buyer's credit. In standard factoring, the supplier initiates the arrangement independently, selling its receivables to a factor without the buyer's involvement. Reverse factoring generally offers better financing rates for the supplier because the credit risk is assessed against the buyer, not the supplier.
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Yes, though the structuring is more complex. In emerging markets, SCF programmes need to account for currency risk, local legal frameworks for invoice assignment, jurisdictional restrictions on cross-border payments, and the credit quality of local buyers. FG Capital Advisors has experience structuring supply chain finance facilities for trade flows across Sub-Saharan Africa, the Middle East, and Asia, and can introduce providers with the appetite and infrastructure to operate in these markets.
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A revolving credit facility is a general-purpose borrowing line that a company draws against as needed and repays over time. Supply chain finance is self-liquidating and tied directly to specific approved trade invoices. Repayment comes from the buyer paying the financier on the invoice due date rather than from the borrower's general cash flow. This makes SCF a lower-risk structure for lenders and typically results in better pricing and higher advance rates than unsecured revolving credit.
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The economics of a formal SCF programme generally become attractive at annual payables volumes above approximately USD 10 to 20 million, though this varies by provider and market. Below that threshold, simpler solutions such as individual invoice discounting or trade credit facilities may be more appropriate. FG Capital Advisors assesses the trade volume, supplier concentration, and buyer credit profile to recommend the most cost-effective structure for the specific situation.
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To begin a review, you will need to provide an overview of the buyer-supplier relationship including trade volumes, payment terms, and invoice frequency; corporate financials for the anchor buyer; a summary of the supplier base including size, geography, and payment history; details of any existing trade or working capital facilities; and a full KYC and AML package for the principal entities involved. Additional information may be required depending on the structure and provider.
If you are a buyer looking to extend payment terms without damaging supplier relationships, or a supplier seeking faster access to cash on approved invoices, submit your mandate for a structured intake review.
Get StartedDisclosure. FG Capital Advisors is not a bank, direct lender, or SCF platform operator. Services are delivered on a best-efforts advisory basis through third-party capital providers and remain subject to underwriting, compliance checks, and definitive legal documentation.
