We’ve pulled together these supplier FAQs to answer the most commonly asked questions from our customers’ suppliers, especially those that are new to supply chain finance.
When your key customer is using supply chain finance, this gives you, the supplier, the opportunity to be paid more quickly, freeing up much needed working capital to pay your own suppliers or subcontractors, and to allow you the freedom to invest and grow. Typically, a much larger customer is able to gain access to funding which would be in accessible to smaller SMBs.
This recently updated article (January 2020) contains many of the frequently asked questions from our clients’ suppliers, and shares more information on how you can benefit.
TradeBridge SCF is not a factoring arrangement. With factoring you contract directly with a bank or a financier who takes a charge over your outstanding invoices as security for working capital or a loan. They become responsible for the collection of the payment and charges could be up to 500% more than SCF.
We contract directly with your customer (the buyer), if you elect to take early payment for an invoice, we will collect the funds from your customer. This means you do not have to provide any security to us.
Every business has to deal with fluctuations in cash flow and gaining access to working capital when cash flows are impacted can be difficult. Releasing early payments from your customers is an effective way of managing spikes in cash requirements.
You can use your outstanding invoices to get immediate access to funds. You are not dependent on your customers paying you on time for you to meet your commitments to your staff and other operating expenses.
All of our payments are ‘non-recourse’ which means that in the unlikely event your customer becomes insolvent (so long as you fulfil the simple conditions in the supplier agreement) your payment is safe, saving you money on credit insurance.
You can use the program as often or a little as you need. Use is discretionary; when you need the funds, you can request early payment.
No. As we do not take any security from you, Woodsford TradeBridge supply chain finance can comfortably work beside other credit facilities you might have such as overdrafts and invoice discounting. This may not be the case for other providers, however, so if your customer is using a supply chain finance facility from another provider, you may wish to investigate further. You can find more general information about supply chain finance here.
No. Whilst we do our best to ensure funding is always available to you, our facilities are subject to an overall limit per customer, so you will be tied to the limit we have agreed with your client.
To access the programme you will need to sign our supplier agreement. It allows us to pay you, and you acknowledge that our payment is full settlement of your customer’s invoice.
Firstly, there is no joining fee or ongoing facility charges. When you take an early payment, there is a discount applied which comprises a financing charge and a fixed service fee. The financing charge is determined by the length of time the funds are outstanding.
All charges are visible, and you can see them before you decide to access the funds.
When your customer approves an invoice for early payment, it is posted on our online portal. You receive an email from us on the same day advising you an invoice has been approved for early payment. You can also see the amount available against any facility limits (if applicable).
You simply sign on to our portal. All invoices that are approved for early payment are listed, and you can select the ones you want.
At present you can only request for an early payment of the full invoice values.
We process payment files every day at 4pm. All approved requests received by this time will be paid the same day via same day transfer (Faster Payments or CHAPS). Approved requests received after 4pm will be paid on the following day.
We provide complete reconciliation reporting, you will easily be able to identify the status of all your invoices. The buyer can also elect for us to pay all your invoices. Therefore if you don’t select to take an early payment the payment will be made by us on the agreed terms.
The funding length is determined the date you decide to take early payment and the invoice due date agreed with your customer.
It firstly depends on your customer as they first must approve all invoices before early payment can be requested. In addition, each supplier may also have a credit limit to prevent any one supplier drawing down the whole facility.
If you do expect a large invoice that you would like to fund via early payment, please advise your buyer and also Woodsford TradeBridge early so that provision for an over-limit payment can be made if possible.
We hope you have found this article useful. If you would like to find out more, you may find our article “David and Goliath vs. The Crocodile and the Plover” interesting, as it explores in more detail the relationship between large buyers and their vital but much smaller subcontractors.
Please do feel free to forward this article to your customer if you think they may find it useful, or alternatively, sign up to receive the latest news and insights from TradeBridge.