Supply Chain Finance for PV Manufacturers, EPCs

Targray’s innovative solar supply chain financing (SCF) program offers PV industry participants the flexibility required to lower costs, unlock value and accelerate growth. First developed to meet the needs of Asian PV manufacturing customers in the mid-2000s, our supply chain finance solutions now support solar panel manufacturers, engineering, procurement & construction (EPC) firms, project developers, and energy storage companies throughout North America, Europe and Asia.
Building on Targray Group’s robust financing facility and decades-long partnerships with solar material suppliers, our Solar SCF program is designed to create a win-win situation for both buyers and sellers. The buyer optimizes working capital through extended payment terms, while the supplier generates additional cash flow through accelerated payment. For more information, consult the table below. To determine your company’s program eligibility, contact the Solar Division.

What is Supply Chain Finance?

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. It encompasses a range of financing and risk mitigation solutions designed to optimize working capital and liquidity in domestic and international supply chains.

Supply chain finance effectively frees up cash that would otherwise be locked in the supply chain, enabling businesses to offer customers better payment terms while allowing them to get paid early. As an extension of the buyer’s accounts payable, SCF is not considered a financial debt. For the supplier, it represents a non-recourse sale of receivables. 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.
  • No impact on balance sheet as no lending occurs.

Solar SCF Process 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:

 

  1. SCF request is initiated by either party.
  2. Targray evaluates the request, proposes a credit limit and terms.
  3. Buyer uses Targray SCF to purchase materials from supplier. (Targray becomes transacting party)
  4. Buyer receives materials in a timely manner – the supplier is paid early.
  5. Buyer pays Targray according to agreed SCF terms; Flexible open terms or long-term LC.

About the Targray Solar Division

Targray Solar’s PV material procurement solutions are a trusted source for market leading photovoltaics manufacturers, solar project developers, EPCs, contractors and installers. Since 2005, the company has played an important part in making solar a viable alternative to traditional energy sources. Our mono, multi and bi-facial solar cell, solar module, and other PV material programs help solar companies lower the cost-per-watt their solar solutions can deliver to end-users.

Working alongside our manufacturing partners and organizations including Solar Energy Industries Association (SEIA) and American Solar Energy Society (ASES), Targray is focused on accelerating the growth of solar energy worldwide.

 

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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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