Recent research from Sveriges Riksbank, the Swedish Central Bank, found that suppliers participating in supply chain finance programs reduced their receivables days by an average of 20%. This improvement unlocked real growth: sales increased 12%, employment rose 9%, and fixed assets grew 15%.
The research examined European SCF programmes, but the dynamics observed aren’t unique to Europe. When suppliers get paid faster, they can free up working capital, improve their creditworthiness, and can access additional financing for growth.
How Supply Chain Finance Works
Supply chain finance (SCF) resolves a fundamental tension: buyers want longer payment terms to preserve cash, while suppliers need faster payment to maintain liquidity.
In a traditional arrangement, a supplier might deliver goods and wait 60-90 days for payment. With SCF, a financial institution steps in. The supplier can get paid within days of delivery—typically at a small discount—while the buyer either pays on the original timeline or gets a term extension. The bank finances the gap between these two dates.
The key difference from traditional factoring is that the buyer actively participates. The buyer confirms each invoice and commits to pay the bank on the due date. This eliminates risk for the bank, which means financing costs are based on the buyer's creditworthiness, not the supplier's. A small supplier with a creditworthy corporate buyer can access financing at rates it couldn't obtain on its own.
Benefits for Suppliers
Improved liquidity. Getting paid in days rather than months frees up cash that would otherwise be locked in receivables. The Sveriges Riksbank research showed this benefit is most significant for financially constrained suppliers—those who were turning down orders or unable to invest because of working capital limitations.
Better access to credit. When suppliers reduce their receivables, their balance sheets improve. Lower receivables ratios signal efficient cash conversion to lenders, which can improve access to other forms of credit at better rates.
Reduced payment risk. Once a buyer confirms an invoice in an SCF program, payment is essentially guaranteed. This eliminates the uncertainty and late payment risk that can disrupt operations.
Growth capacity. The Sveriges Riksbank study found that sales growth from SCF came primarily from expansion to new customers, not just increased sales to the SCF buyer. This suggests SCF removes constraints that were preventing suppliers from pursuing other growth opportunities.
Benefits for Buyers
Extended payment terms. Buyers can negotiate longer payment periods—sometimes extending from 30-60 days to 90 days or more—without harming supplier relationships, because suppliers have access to early payment through the program.
Stronger supplier relationships. Providing suppliers with financing access strengthens the supply chain. Financially healthier suppliers are more reliable, deliver higher quality products/services, are more likely to invest in capacity, and better able to respond to demand fluctuations.
Supply chain resilience. When key suppliers face working capital constraints, they may reduce quality, miss deliveries, or exit the market entirely. SCF programs help ensure supply chain stability.
Operational efficiency. Modern SCF platforms automate much of the payment and financing process, reducing administrative burden for both buyers and suppliers.
The Faktorlab Platform
Faktorlab digitalises and automates the SCF process, creating a financial ecosystem where all parties benefit.
For buyers: The platform enables you to maintain or extend payment terms while ensuring suppliers can access early payment. You gain better cash flow management, stronger supplier relationships, and reduced supply chain risk. Setup is fast—most programs are operational within 6-8 weeks.
For suppliers: You receive payment within days of invoice approval rather than waiting 30-90 days. The platform provides transparent pricing based on the buyer's credit rating, typically at rates much lower than alternative financing. There's no need for complex applications or credit assessments—if you're in the program, you have access.
How it works: When you issue an invoice for goods or services delivered, your buyer reviews and approves it in the Faktorlab platform. Once approved, you can choose to receive early payment at a clearly disclosed discount, or wait for payment at the original due date at no cost. The buyer pays Faktorlab according to the agreed timeline. Everything is digital, automated, and transparent.
Beyond SCF: Faktorlab also offers dynamic discounting, allowing buyers with excess liquidity to offer early payment directly to suppliers at negotiated discounts. This creates flexibility across different financial situations.
The platform can connect with existing ERP and accounting systems, integrate with payment processors, and provide full visibility into invoice status, financing costs, and payment schedules for all parties.
Takeaways
Supply chain finance works because it aligns incentives:
- Buyers optimise working capital.
- Suppliers access affordable financing and improve liquidity.
- Banks are able to provide low-risk credit.
The Sveriges Riksbank research demonstrates these benefits are substantial and lasting—at least for suppliers who face genuine working capital constraints. Whether the exact magnitudes translate to other markets remains to be measured, but the underlying mechanism should hold. When capital is trapped in receivables and preventing growth, freeing it up matters.
