WHAT IS SUPPLY CHAIN

FINANCE ?
1. Supply Chain Finance (SCF) is one of the options for extending short
term working capital finance to dealers/suppliers (“Spokes”) who have
business relationships with large corporates (“Anchors”).

2. In this type of financing, bank structures facilities on digital platform to

finance the suppliers (vendors) and buyers (dealers) of a large
corporate (Anchor), wherein each financial transaction is linked to a
base document i.e. “Invoices/Purchase Orders/Indent” between the
Anchor and the Spoke.

3. Financing can also be made to the Anchor itself against its purchases
from vendors.
 OBJECTIVE OF SUPPLY CHAIN
FINANCE
1. Supply Chain Finance attempts to bridge the gap of
supplying goods and receiving proceeds there against, by
enabling both the parties to get hassle-free Working Capital
to carry out sale and purchase transactions in a much
relaxed manner on the terms & conditions agreed upon by
them.

2. Seamless delivery on a technology platform that integrates

with the corporate system.

3. Flexible terms of sanction at competitive pricing with hassle

free documentation & disbursement process.
 TYPES OF SUPPLY CHAIN
FINANCE ?

1. DEALER FINANCE
2. VENDOR FINANCE
3. PAYABLE FINANCE
 DEALER FINANCE
1. It is a mechanism through which Bank provides Overdraft
Limit to the Dealers.

2. Each disbursement in the OD account will be against

invoice raised by the Anchor on dealer and shall have a
fixed tenor with distinct repayment dates for each of the
invoices.

3. Disbursement is made only to the credit of Anchor’s

account against valid invoices raised by the Anchor (for
goods supplied to the dealer) which are duly accepted by
the Dealer.
 PROCESS:
Step 1 : The Dealer (spoke) raises a purchase order requesting a consignment of goods and forwards it to the
supplier.
Step 2 : The Supplier (anchor) ships the goods consignment and initiates the request for finance by uploading
the invoices electronically on the supply chain finance platform.
Step 3 : Once the invoices are electronically accepted by the Dealer (spoke), validation of the transaction for
parameters like availability of credit limit, validity of invoice, overdue position etc is digitally verified by the
Supply Chain Finance system.
Step 4 : On successful validation, finance is instantaneously created by the system and disbursement is credited
in to the Supplier’s (anchor’s) account.
Step 5 : On the due date the Dealer (Spoke) liquidates the outstanding invoice amount.
 VENDOR FINANCE
1. Vendor Finance is a mechanism through which Bank provides
Overdraft Limit to the Vendors.

2. Each disbursement in the OD Account will be against invoice

raised by the Vendor on the Anchor and shall have a fixed
tenor with distinct repayment dates for each of the invoices.

3. Disbursement is made only- to the credit of Vendor’s account

against valid invoices raised by the Vendor on the Anchor (for
goods supplied to the Anchor) which are duly accepted by the
Anchor. Limits are on the Vendor i.e. our obligor / borrower is
the Vendor.
 PROCESS:
Step 1 : The Buyer (anchor) raises a purchase order requesting a consignment of goods and
forwards it to the supplier.
Step 2 : The Vendor (spoke) ships the goods consignment and initiates the request for finance by
uploading the invoices electronically on the supply chain finance platform.
Step 3 : Once the invoices are electronically accepted by the Buyer (anchor), validation of the
transaction for parameters like availability of credit limit, validity of invoice, overdue position etc. is
digitally verified by the Supply Chain Finance system.
Step 4 : On successful validation, finance is instantaneously created by the system and disbursement
is credited in to Vendor’s (spoke’s) account.
Step 5 : On the due date the Vendor’s (spoke’s) liquidates the outstanding invoice amount.
 PAYABLE FINANCE
1. Payable Finance is a mechanism through which Bank
provides Overdraft Limit to the Anchor.

2. Each disbursement in the OD Account will be against

invoice raised by the Vendor on the Anchor and shall
have a fixed tenor with distinct repayment dates for
each of the invoices.

3. Disbursement is made to the credit of Vendor’s

account against valid invoices raised by the Vendor on
the Anchor (for goods supplied to the Anchor) which
are duly accepted by the Anchor.
 PROCESS:
Step 1 : The Buyer (anchor) raises a purchase order requesting a consignment of goods and
forwards it to the supplier.
Step 2 : The Vendor (spoke) ships the goods consignment and initiates the request for finance by
uploading the invoices electronically on the supply chain finance platform.
Step 3 : Once the invoices are electronically accepted by the Buyer (anchor), validation of the
transaction for parameters like availability of credit limit, validity of invoice, overdue position etc. is
digitally verified by the Supply Chain Finance system.
Step 4 : On successful validation, finance is instantaneously created by the system and disbursement
is credited in to Vendor’s (spoke’s) account.
Step 5 : On the due date the Buyer’s (anchor’s) liquidates the outstanding invoice amount.