SCPF User Manual#

Supply Chain Financing and Procurement (SCPF) Platform is a trade financing platform built by Lilardia, which can be operated for a single financier or as a marketplace which brings financiers, suppliers (who seek for funding), and purchasers together. 

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Invoice Financing#

Targeted industry is called “Supply Chain Financing” and it has different services in the market including “Invoice Financing”.

Invoice financing is a general term used for a lending product that allow companies to finance slow-paying accounts receivable. Invoices can be discounted or sold to a financier in exchange for an immediate payment. Who will be benefitted in this industry?

  • Growing businesses who requires additional working capital (Suppliers or Purchasers)
  • Companies looking forward to improving cash flows against slow paying receivables (Suppliers)
  • Businesses invoicing other businesses for the sale of goods and services (Suppliers)
  • Businesses with a higher number of suppliers/purchasers making overall supply chain financially efficient; as a consolidated platform (Suppliers or Purchasers)

How Does It Work?#

Transactions can be initiated either by supplier or purchaser (requester) or with the involvement of both the parties. Invoices would be financed in two or agreed instalment payments where discounting percentage, interest/fee structure can be introduced based on the strength/credit-worthiness of the purchaser/supplier or both. See different scenarios below.

  1. Most invoice financing transactions are structured to be financed in two instalment payments. The first instalment covers about 80% of the value of the invoice and is deposited to supplier’s bank account within a shorter period of requesting of funds. Remaining 20%, less the finance fee, will be credited to the supplier’s account once the purchaser pays the invoice in full to the financier upon maturity of the same. This model is called Invoice Discounting.
  2. Upon supplier’s request, the financier will purchase an invoice/bill and remit an agreed percentage of the invoice to the supplier’s account, by recovering interest and relevant fees. Then the purchaser pays the full amount of the invoice to the financier on the agreed date. This model is called Invoice Purchasing.
  3. As a “third model”, a hybrid of above two can exist in the real word situations.

In the platform, a unified model is be created that can be configurable, to cater for any of the three scenarios above. Invoices are to be verified before funding. Verification allows the financier to determine that the invoice is due and that there are no issues that could prevent its payment (e.g. disputes, chargebacks, etc.). Such an invoice is called a Confirmed Invoice (also as Approved Invoice). The scenario can be applied in local and cross border trade using the platform.

Financing Models#

Invoice financing can take place in different variations. Following are the three models that the platform supports.

  1. Reverse Factoring - Purchasers may present confirmed invoices (from suppliers) to the system and the suppliers can be financed based on the strength of the purchaser’s repayment capacity.
  2. Factoring - Suppliers can present invoices confirmed by the purchasers to the system, and the supplier can be financed based on the strength/credit worthiness of the supplier (as well as the purchaser if necessary).
  3. Discounting - Suppliers can present invoices that they claim as confirmed by the purchasers to the system, and the supplier can be financed solely based on the strength/credit worthiness of the supplier. In this case, purchaser does not come into the picture at all and the purchaser might not have any knowledge of the financing arrangement of the invoice(s).

Key Roles (Actors)#

There are three types of roles that get involved in the system (note that they are all organization/business, not a person/user). In general, each of them is called a party. Following are different types of parties (actors) involved.

  1. Purchasers – Large/medium scale corporates who has a large/strong supplier portfolio
  2. Suppliers – Suppliers connected to purchasers, or who is connected to a sound supply chain
  3. Financiers – Eligible Banks/Financial-Institutions/Organisations with funding capabilities

Note: There will be a virtual actor for machine-initiated activities and API based interactions. Please note that, this actor will always impersonate one of above actors. In addition to that, there will be a system actor for internal housekeeping activities.

Value Supplier Purchaser Financier
Consolidated total payables tracking Yes
Consolidated total receivables tracking Yes
Improve cash flows against slow paying receivables Yes
Short term financing and returns Yes