Supply Chain Financing
A financing arrangement that helps a business pay its suppliers faster (often at a discount) while extending its own payment terms, using a third-party financier to bridge the gap.
The financier pays the supplier early, at a small discount, and collects the full amount from the buyer later on the buyer’s normal payment schedule, which improves cash flow for both sides of the relationship without either party taking on new debt in the traditional sense.
It’s most common among larger buyers with many suppliers, used to strengthen supplier relationships and payment terms across a supply chain rather than as a financing tool for a single transaction.
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