Supply Chain Finance (SCF ) -  A key enabler of Treasury Goals

A corporate’s Treasury function plays a critical role in shaping and executing its financial strategy—enabling growth and managing risks by optimizing cash flows. As businesses increasingly operate in a VUCA world, treasurers play a key role in ensuring the long-term stability of a company. 

One of the most effective ways to optimise cash flow is through Supply Chain Finance (SCF). By leveraging SCF, treasury teams can enhance liquidity, optimize working capital, mitigate risk, and create a more resilient balance sheet for the corporate.  By adopting SCF as an intrinsic part of financial planning and cash flow management, corporate treasuries achieve the following objectives: 

1. Strengthening Liquidity Across Payables and Receivables

Liquidity is a primary concern for treasurers, and SCF provides structured solutions for both ends of the supply chain:

• Payable Financing and Vendor Financing allow corporates to extend payment terms while ensuring that their suppliers receive early payments via financing from Financial Institutions. 
• Receivables Financing and Dealer financing from Financial Institutions provides credit to buying firms, while helping the anchor corporate receive its money immediately and reduce its  Days Sales Outstanding (DSO). 

2. Reducing Financial and Supply Chain Risks

Treasurers constantly manage risks arising from financial instability of some suppliers, input price volatility, and interest rate fluctuations. SCF plays a key role in mitigating these risks:

• By leveraging vendor financing programs, treasures ensure timely payments to their suppliers, thus preventing disruptions in the supply chain and enhancing supplier stability.
• Suppliers who are assured of early payments through Supply Chain Finance, are likely to provide better pricing to the corporate.   This helps reduce volatility of input costs, allowing the corporate to better manage its margins. 
• One major advantage of Supply Chain Finance is that many Receivables Financing programs are ‘without recourse’ to the corporate.  This helps treasurers make corporate balance sheets leaner, improving key financial ratios. 
• Implementing SCF programs with multiple Financial Institutions helps corporates reduce their dependence on a bank, minimizing concentration risk. 

A leading automotive component manufacturer partnered with Vayana to implement a multi-FI SCF program for their Vendor Financing. Since the vendor financing was spread across multiple banks with differing risk appetites and financial criteria, it helped reduce the corporate’s dependence on a single financial institution. This approach ensured liquidity for the corporate’s suppliers of all sizes (large corporates to MSMEs),  thus enhancing the resilience of its supply chain. [Read more about this case study here]

3. Unlocking Working Capital and Cost Efficiency

Optimising working capital remains a top priority for treasury teams. 

• Payables Programs help in extending payment terms without straining supplier relationships, thereby optimising Days Payable Outstanding (DPO).
• Receivables Programs accelerate cash flow, leading to a more predictable cash cycle and reducing Days Sales Outstanding (DSO).
• SCF funding is often cheaper than traditional bank loans, helping both corporates and supply chain partners reduce borrowing costs.

By leveraging SCF, companies free up trapped working capital, which can be reinvested into strategic initiatives, such as expansion or innovation. A leading agri-machinery player leveraged Vayana’s SCF to pay its MSME vendors immediately, while getting enhanced credit of 90 days from a Financial Institution. This vendor-centric financing approach strengthened supplier relationships and enabled uninterrupted  supply of critical inputs from MSME vendors. [Read more about this case study here]

4. Driving Digital Transformation in Treasury

Modern SCF solutions are increasingly digital-first, offering treasury teams real-time visibility and automation in managing their receivables and payables. Benefits of digital SCF platforms like Vayana include:

• Automated reconciliation and payment processing
• Enhanced forecasting and cash flow predictability
• The platform digitizes workflows which enables quicker, deeper and more consistent collaboration between corporates, dealers/suppliers, and FIs

Making SCF a Key Tool for Corporate Treasuries

Treasures should take a structured approach to maximize the benefits of SCF: 

• Engage with procurement, sales and channel teams to identify SCF opportunities across the corporate.
• Design SCF programs tailored to the company’s liquidity and risk profile.
• Leverage technology to improve efficiency, visibility, and scalability.
• Work closely with CFOs to deploy SCF programs with the objective of making corporate balance sheet leaner  

By embedding SCF across both payables and receivables, treasury teams can become key enablers of financial growth, driving liquidity, cost efficiency, and supply chain resilience.