Supply chain finance

Supply chain finance (SCF), also known as supplier finance or reverse factoring, comprises a suite of financial solutions that aim to manage working capital and liquidity for businesses within a supply chain. These arrangements are typically initiated by a buyer to allow their suppliers to access funding for their accounts receivable at interest rates based on the buyer's credit rating, which is often lower than the supplier's own cost of capital. The process is intended to provide financial stability to the supply chain by reducing costs for the participating parties.

A 2015 report estimated that SCF had a potential global revenue pool of $20 billion.

Reverse factoring differs from traditional factoring, where a supplier independently seeks to finance its receivables through a third party. As of 2011, the reverse factoring market was estimated to represent less than 3% of the total global factoring market. The technique has also been associated with financial controversy; for example, it was utilized in schemes that contributed to the collapse of the Evergrande Group, China's second-largest real estate company.