A few months ago, the procurement head of a major FMCG company in Lagos received a frantic call from one of their key packaging suppliers. The supplier had just landed a surge of orders but didn’t have the cash on hand to purchase raw materials. Expected payment from the FMCG giant was still 75 days away. Without immediate funding, production would stall, and with it, the company’s ability to meet market demand.
In today’s unpredictable business environment, many large companies extend payment terms to protect their own liquidity, but this often leaves suppliers struggling to access the funds they need to keep production on track. When suppliers face funding gaps, the ripple effects are slower production, missed delivery timelines, and weakened value. This is why Supply Chain Finance (SCF) has become an essential strategy, helping businesses of all sizes improve cash flow, maintain smooth operations, and build stronger, more resilient supply networks that can adapt to changing market conditions.
What SCF Is and Why It’s Relevant to Corporates
Supply Chain Finance (SCF) is a financing arrangement that enables suppliers to receive payment earlier, often within days of invoicing, while corporates (buyers) can maintain or even extend their payment terms. Instead of suppliers waiting 60, 90 or 120 days for payment, financiers step in to advance the funds, with the buyer repaying the financier at the agreed maturity date.
Historically, SCF was limited to large corporates and their Tier-1 suppliers. Today, tech-enabled platforms like Fiducia are making the process easier, faster, and more transparent, allowing corporates to extend SCF across their entire supply chain, including smaller vendors.
Once corporates understand how SCF impacts their operations, the question becomes not if they should adopt SCF, but why they can’t afford to ignore it.
Why Corporates Should Care About SCF
Forward-thinking organizations view SCF not as an act of goodwill but as a lever for competitive advantage. According to the World Trade Organization (WTO), the SCF market is valued at around $2.3 trillion today and is projected to double by 2028, highlighting its growing importance in global trade. This shows its rapid adoption by companies seeking a tangible edge in working capital management and supplier relationships. Other benefits of SCF include:
- Optimized working capital – SCF allows corporates to extend payment terms without placing financial strain on suppliers. This means a buyer can preserve cash towards strategic investments such as expanding operations, funding research and development, or entering new markets, while suppliers still receive early payment through SCF.
- Resilient supply chains – When suppliers have steady access to working capital, they’re less likely to experience production delays, stockouts, or quality issues caused by cash flow constraints. This stability feeds directly into the corporate’s ability to deliver consistently to customers.
- Procurement cost savings – SCF models like early payment programs create opportunities for corporates to reduce procurement costs. Buyers can offer early payments from their own funds in exchange for discounts, turning available liquidity into measurable savings.
- Improved supplier relationships – Financially healthy suppliers are more loyal and reliable, reducing supplier churn and the costs of onboarding replacements. SCF transforms the buyer-supplier relationship from transactional to strategic.
Understanding these benefits sets the stage for addressing the myths and misconceptions that still hold some corporates back.
Common Misconceptions About Supply Chain Finance
Despite its global rise, supply Chain Finance (SCF) is often still misunderstood in Africa as a tool only for SMEs, but its value extends far beyond that. SCF provides large corporates with liquidity, strengthens supplier relationships, and creates resilience across entire supply chains. Modern digital platforms like Fiducia make the process seamless, allowing suppliers early payment at competitive rates while buyers optimize working capital. Unlike debt, SCF is a collaborative financing model that fuels stability and growth. For African businesses, embracing SCF is not just about cash flow, it is about building stronger partnerships and ensuring sustainable, long-term success in increasingly competitive markets.
Now these misconceptions are cleared, the next step is exploring the SCF models available and how corporates can choose the right fit.
SCF Models Relevant to Corporates
While there are many approaches to Supply Chain Finance, three models stand out for corporate adoption. Each offers different advantages depending on supplier needs, liquidity availability, and strategic objectives.
- Factoring – Supplier sells invoices to a financier at a discount for immediate payment.
- Reverse Factoring (Buyer-Led) – The buyer initiates, enabling suppliers to access cheaper funding through the buyer’s stronger credit profile.
- Vendor Management Solutions (VMS)– Vendor Management Solutions combine financing with supplier relationship management, providing corporates with a centralized system to onboard, verify, monitor, and finance suppliers.
Understanding the models is one thing. On the other hand, the real value comes when these approaches are executed quickly, transparently, and at scale, and that’s where Fiducia sets itself apart.
The Fiducia Advantage: A Modern Approach to SCF
The future of supply chain resilience isn’t in isolated tactics; it is in a strategic approach that leverages financial tools for mutual benefit. Modern platforms like Fiducia are solving the historical complexities of SCF by turning approved invoices into immediate liquidity through a multi-financier marketplace.
By digitizing processes, Fiducia makes SCF simple, scalable, and impactful. For instance, a buyer-led reverse factoring model on Fiducia works like this:
- Vendor Supplies Goods: The supplier delivers goods or services.
- Corporate Validates Invoice: The corporate uploads and approves the invoice on the Fiducia platform.
- Vendor opts in: The supplier chooses to receive early payment through the SCF program.
- Financiers Bid: The approved invoice enters Fiducia’s competitive marketplace, where vetted financiers submit bids. The supplier selects the best offer.
- Funding is Secured: The supplier receives up to 90% of the invoice value, typically within 48 hours, without collateral or long applications.
- Corporate Pays Financier: On the original due date, the corporate settles the invoice directly with the financier, often with the option to extend payment terms for even greater flexibility.
This tech-driven approach ensures suppliers are paid quickly, financiers get de-risked lending opportunities, and buyers retain control over their working capital strategy.
For corporate leaders looking to strengthen supplier relationships, improve procurement efficiency, and build resilient value chains, SCF is no longer optional, it’s a competitive advantage. It’s time to move beyond traditional models and embrace a platform-driven approach that builds stronger, more sustainable value chains. To see how Fiducia is enabling smarter financing across Africa, visit www.myfiducia.com to request a demo today.
