Solar Supply Chain FinancingInnovative financing solutions for Solar and Energy Storage
Supply Chain Finance for PV Manufacturers, EPCs
Supply Chain Finance Explained
What is Supply Chain Finance?
Supply Chain Finance encompasses a range of financing and risk mitigation solutions designed to optimize working capital and liquidity in domestic and international supply chains. It is typically applied to open account trade and triggered by events in the supply chain.
Example flow of goods, documentation and financing in SCF | Source: BSR.org
SCF Program Benefits
Buyers and suppliers have competing financial interests when it comes to the supply chain. Buyers want to pay as late as possible, and suppliers want to be paid faster. Supply chain finance (SCF) – alternatively described as supplier finance or reverse factoring – has evolved from the desire to bridge these conflicting interests. The balance sheets of buyers and suppliers are not impacted by SCF transactions, as no lending occurs on either side.
Solar SCF Buyer Benefits
- Extends payment terms on PV material or solar panel purchases.
- Enhances cash flow by freeing up cash that would otherwise be locked in the supply chain.
- Provides buyer with more working capital to invest in other important initiatives.
- Improves several financial metrics without impacting balance sheet.
Solar SCF Supplier Benefits
- Enhances cash flow through accelerated payment on receivables.
- Mitigates the effect of payment term extensions to buyers.
- Optimizes working capital, enabling other strategic investments to be made.
- Lower fees than other financing approaches as rates are based on buyer’s credit history and rating.
Solar SCF Transaction Flow
Targray’s Solar SCF program can be initiated by either the buyer or the supplier. In the first scenario, the buyer uses our program to extend payment terms with some or all of its suppliers. In the second scenario, the supplier proposes our Solar SCF solution to get paid early. In both scenarios, the transaction is carried out as follows:
- SCF request is initiated by either party.
- Targray evaluates the request, proposes a credit limit and terms.
- Buyer uses Targray SCF to purchase materials from supplier. (Targray becomes transacting party)
- Buyer receives materials in a timely manner – the supplier is paid early.
- Buyer pays Targray according to agreed SCF terms; Flexible open terms or long-term LC.
Related Products & Services
Supported by material allocation agreements with leading solar PV manufacturers, we provide the global inventory management expertise required to create differentiated value for our customers.
Our interdisciplinary team of solar industry professionals combines global resources with finance and logistics expertise to deliver valuable supply chain solutions for Targray customers in over 50 countries.
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