Cash flow is just one reason companies turn to supply chain finance. Many executives are surprised to learn that supply chain finance has a positive impact on numerous other financial metrics. From better credit ratings to increased shareholder value, it can strengthen the overall fiscal health of a company.
Even more surprising are the long-tail implications of these improvements. Did you know that most companies pay suppliers too quickly which in effect funds their competitors? Or that corporate debt is at record levels leading to many companies being overleveraged during a time of much-needed innovation and transformation? Or that it’s possible to increase enterprise value in any economic climate?
In this perspective, we talk about how supply chain finance provides lift across a broad range of critical financial metrics including:
- A higher days payable outstanding (DPO) which leads to better cash flow
- The ability to pay down or offset the need to increase corporate debt as a means to fund strategic initiatives
- Lower leverage ratios that can translate into lower interest rates
- More favorable credit ratings
- Better investor sentiment and enterprise value regardless of economic conditions