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The global supply chain finance (SCF) market has seen robust growth in recent years. In 2023, the market was valued at approximately $11.54 billion. According to Dublin-based Research & Markets, it is projected to grow at a compound annual growth rate (CAGR) of 8.25%, reaching $17.16 billion by 2028. Beyond that, the market is expected to sustain its momentum, reaching $26.3 billion by 2033, with a CAGR of 8.92% between 2028 and 2033.

How does supply chain finance differ from receivables finance?

While supply chain finance (SCF) and receivables finance both aim to enhance liquidity and optimise cash flow, they operate differently and cater to distinct aspects of financial management. Understanding their distinctions is crucial for businesses looking to select the right solution.

Global Supply Chain Finance (SCF)

  • Scope: Focuses on the entire supply chain, including buyers and suppliers.
  • Participants: Involves multiple parties, such as buyers, suppliers, and financial institutions.
  • Mechanism: Often centres on buyer-initiated early payment programs for suppliers. Common tools include reverse factoring and dynamic discounting, where suppliers receive early payment at favourable terms.

Receivables Finance

  • Scope: Targets a company’s own accounts receivable.
  • Participants: Primarily involves the company selling its invoices and the financial institution providing financing.
  • Mechanism: Includes options like invoice factoring and invoice discounting, where businesses monetise their unpaid invoices to access cash before customer payments are received.

While both solutions improve liquidity, SCF focuses on the entire supply chain, benefiting both buyers and suppliers, whereas receivables finance is specifically designed to address the seller’s outstanding invoices. The choice between the two depends on the company’s financial strategy and operational priorities.

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