How a programme works
A buyer establishes a facility with a funder and uploads approved supplier invoices to a platform. Suppliers can then choose, invoice by invoice, to be paid immediately less a small discount, or to wait for the original due date. On the due date the buyer pays the funder in full.
Because payment is made against invoices the buyer has already approved, there is no dispute risk in the funder's position. That is what allows the discount to be priced off the buyer's credit standing rather than the supplier's — often a difference of several percentage points for a smaller supplier.
Who benefits, and how
The supplier converts a 60 or 90 day receivable into cash within a day or two, at a rate it could not access on its own balance sheet, with no security given and no facility of its own to manage.
The buyer stabilises a supply chain it depends on, can often negotiate better pricing or longer terms in exchange for early-payment access, and keeps its own working capital intact. For large procurement operations it is one of the few levers that improves both sides of a trading relationship at once.
How it differs from receivables finance
Receivables finance is supplier-led: the supplier borrows against its own sales ledger, the facility is on the supplier's balance sheet, and pricing reflects the supplier's credit. Supply chain finance is buyer-led: the buyer arranges the programme and the pricing follows the buyer's rating.
The practical consequence is that a supplier selling to a large, well-rated buyer will almost always get cheaper cash through the buyer's programme than through its own facility — but only if the buyer runs one.
Accounting and disclosure
Whether a programme leaves payables classified as trade payables or reclassified as borrowing depends on whether the terms of the underlying obligation change. Extending payment terms as part of the programme, or the funder assuming a materially different obligation, can trigger reclassification, and disclosure requirements for supplier finance arrangements have tightened in recent years.
Agree the treatment with your auditors before launch rather than at year-end. This is general information, not accounting advice.
Getting a programme in place
Funders look for an investment-grade or strong mid-market buyer, a stable and reasonably concentrated supplier base, and a payables system that can produce clean approved-invoice data. Onboarding runs six to twelve weeks including supplier due diligence.
Where a buyer is not large enough to sponsor a programme, confirmed payables facilities and selective receivables finance achieve much of the same outcome for individual suppliers. Global Funding Gateway can approach funders on either side of the relationship, with no upfront fees.
Frequently asked questions
Is supply chain finance debt for the supplier?
No. The supplier sells an approved receivable without recourse and has no borrowing on its balance sheet — one of the main reasons suppliers prefer it to a facility of their own.
What does supply chain finance cost the supplier?
A discount for the days accelerated, priced off the buyer's cost of funds plus a margin. For a supplier selling to a strong buyer, it is typically well below the cost of its own receivables facility.
Can smaller buyers run a programme?
Mid-market buyers can, though funders will size the facility against their own credit and may require a shorter list of eligible suppliers. Below that, confirmed payables or selective invoice finance is usually the practical route.
Last reviewed: 2026-08-15