The Hybrid Approach

Supplier Finance

Hold onto cash for longer whilst ensuring suppliers have early access to affordable capital.

• Bank/funder pays suppliers early while buyer pays bank/funder back at agreed later date
• Allows for optimisation of buyers B/S metrics eg. bank compliance reporting
• Buyers retain cash for other strategic purposes
• Buyers leverage their superior credit rating to assist suppliers

Dynamic Discounting:

Cash flush buyers effectively turn their accounts payable department into a profit centre via increased margins (lower COGS). Depending on timing and their own cash conversion cycle, yields are generally well above the returns they can achieve on short term investments – with no additional risk.

Supplier Finance:

Buyers that lack the cash flow to utilise dynamic discounting, or wish to retain cash for other initiatives, can utilise funding from a connected funder that settles invoices on the buyer’s request with repayment to the funder either on invoice due date or at an agreed later date (DPO extension).

The net effect is to release much needed funds to suppliers where the discount captured is set off against the interest charged on the advance to the buyer.