GSCF services Trade Payables Financing programs on behalf of Funders.
Trade Payables Financing
How does it work?
- Individual facility provided by a Funder to a company (Buyer) with the aim of extending its payment terms towards one or more of its key trade Suppliers
- The Funder pays the Supplier on behalf of the Buyer at the invoice maturity date, or earlier if there is a cash discount available. On the newly agreed upon payment term, the Buyer pays the Funder the total invoice amount plus a program fee, less the value of the cash discount (if applicable)
- Suppliers are not legally involved in the program, only acknowledging that the invoice payment is made by the Funder on behalf of the Buyer
- The Buyer and Funder execute a Supplier Trade Settlement Services Agreement (STSSA)
- Extend payment terms towards key Suppliers who do not offer such extensions
- Quick implementation
- As Suppliers are not legally involved, Buyers have the freedom to implement a truly tailored program
- The program could be classified as Accounts Payable rather than Short-term debt thus extending overall DPOs
- Existing credit lines with relationship banks can be freed up
Who can use it?
Companies that source from key suppliers and are looking to extend their payment terms without having to legally engage them.