Supply Chain Finance Techniques


Below are key techniques making up the SCF portfolio and best reflecting current market practice. This definitional framework makes a key distinction between a cluster of techniques based on Receivables Purchase, and a range of other techniques clustered on the basis of loans or advances. As a third category an enabling framework, the BPO, is defined.

Synonyms and variations are also identified. Please note that synonyms are a variety of expressions used in the industry to connote an exact or close replication of the same technique. The recommended standard market definition is the headline expression used in the definition box. The Forum proposes the general discouragement of the use of any other expressions as the standard market definitions for the relevant SCF technique. The Forum neither endorses nor rejects the synonyms provided.

Receivables Purchase


Receivables Discounting is a form of Receivables Purchase, flexibly applied, in which sellers of goods and services sell individual or multiple receivables (represented by outstanding invoices) to a finance provider at a discount.

  • Receivables Finance
  • Early Payment
  • Receivables Purchase
  • Invoice Discounting


Forfaiting is a form of Receivables Purchase, consisting of the without recourse purchase of future payment obligations represented by financial instruments or payment obligations (normally in negotiable or transferable form), at a discount or at face value in return for a financing charge.

  • Without recourse financing
  • Discounting of promissory notes
  • Discounting of bills of exchange


Factoring is a form of Receivables Purchase, in which sellers of goods and services sell their receivables (represented by outstanding invoices) at a discount to a finance provider (commonly known as the ‘factor’). A key differentiator of Factoring is that typically the finance provider becomes responsible for managing the debtor portfolio and collecting the payment of the underlying receivables.

  • Receivables Finance
  • Receivables Services
  • Invoice Discounting
  • Debtor Finance


Payables Finance is provided through a buyer-led programme within which sellers in the buyer’s supply chain are able to access finance by means of Receivables Purchase. The technique provides a seller of goods or services with the option of receiving the discounted value of receivables (represented by outstanding invoices) prior to their actual due date and typically at a financing cost aligned with the credit risk of the buyer. The payable continues to be due by the buyer until its due date.

  • Approved Payables Finance
  • Reverse Factoring
  • Confirming
  • Confirmed Payables
  • Supplier Payments



Corporate Payment Undertaking is provided as a buyer-led programme within which sellers in the buyer’s supply chain can, at their option, access liquidity by means of receiving discounted early payment. Such payment to a seller covers seller’s invoices (or buyer approved amounts relating to such invoices). The technique provides a seller of goods or services (seller) with the option of receiving the discounted value as early payment of outstanding invoices (that have an unconditional approval by the buyer to pay on the due date) prior to their actual due date and typically at a discount with cost of early payment more aligned to the credit risk of the buyer.


An advance payment that is directly paid by the buyer to its seller. Unlike in other SCF techniques, there is no financing from the Finance Provider but rather a service to the buyer / seller in calculating (and optionally processing) the discount amount the buyer needs to pay. The buyer will pay the original invoice amount at a discount out of its own cash.


A technique that leverages a B2B network (that can be DLT-based). Following a ‘matched transaction’ in that network, a bank may issue a payment undertaking at the benefit of a corporate beneficiary or another bank. Such Bank Payment Undertaking may be the basis for a financing.



Loan or Advance against receivables is financing made available to a party involved in a supply chain on the expectation of repayment from funds generated from current or future trade receivables and is usually made against the security of such receivables, but may be unsecured.

  • Receivables Lending
  • Receivables Finance
  • Invoice Financing
  • Trade Receivable Loans
  • Trade Loans


Distributor Finance is the provision of financing for a distributor of a large manufacturer to cover the holding of goods for re-sale and to bridge the liquidity gap until the receipt of funds from receivables following the sale of goods to a retailer or end-customer.

  • Buyer Finance
  • Dealer Finance
  • Channel Finance
  • Floor Plan Finance


Loan or Advance against Inventory is financing provided to a buyer or seller involved in a supply chain for the holding or warehousing of goods (either pre-sold, un-sold, or hedged) and over which the finance provider usually takes a security interest or assignment of rights and exercises a measure of control.

  • Warehouse Finance
  • Financing against Warehouse Receipts
  • Inventory Finance
  • Floor Plan Finance


Pre-shipment Finance is a loan provided by a finance provider to a seller of goods and/or services for the sourcing, manufacture or conversion of raw materials or semi-finished goods into finished goods and/or services, which are then delivered to a buyer. A purchase order from an acceptable buyer, or a documentary or standby letter of credit or Bank Payment Obligation, issued on behalf of the buyer, in favour of the seller is often a key ingredient in motivating the finance in addition to the ability of the seller to perform under the contract
with the buyer.

  • Purchase Order finance
  • Packing credit/finance
  • Contract monetization financing

Have a look at the Glossary for the SCF techniques

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