The finance directors of supply chain companies need to look at a "wide range" of different financing options, according to one expert.
Speaking to Q Finance, Keith Richardson, relationship director in Lloyds Banking Group's Major Corporate section, said one of the most advantageous short-term sources of finance is supply finance, as it is negotiated by big retailers with their banks on behalf of the suppliers who want to participate.
"Where a big retailer might usually pay invoices in 60 days, with supply financing the suppliers get their cash straight away. The retailer sends the cleared invoice through to the bank, together with a note that it intends to pay in 50 days," he explained.
Mr Richardson said that the bank's risk lies with the retailer, not with individual supply companies, and the suppliers are getting debt financing at a price that would never be available to them considered solely on their own financial merits.
It comes after a post on the Perceptant blog noted that firms looking to streamline their supply chain strategy and maximise input will find that collaborative planning is the solution to their problem.
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