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What is supply chain finance?
Supply chain finance is a set of financial techniques that allow suppliers to receive early payment on invoices while allowing buyers to extend their payment terms — improving cash flow on both sides of a trading relationship without either party taking on traditional debt.
What Is Supply Chain Finance? (And How to Access It Without a Big Bank)
Supply chain finance is one of the most effective tools in corporate treasury — but for most of its history, it has been accessible only to large enterprise companies with established bank relationships. This guide explains how it works and how mid-market companies can access the same benefits today, without a bank programme.
The Core Problem Supply Chain Finance Solves
In most B2B trading relationships, there is a timing mismatch: the supplier delivers goods or services but must wait 30, 60, or 90 days to be paid. Meanwhile, the buyer has cash sitting in treasury accounts earning minimal returns, not yet deployed.
Supply chain finance techniques resolve this mismatch — allowing the supplier to access cash immediately and the buyer to deploy capital productively, without either party changing the underlying commercial relationship.
The Main Types of Supply Chain Finance
1. Dynamic Discounting (Buyer-Funded)
The buyer uses their own cash to pay the supplier early in exchange for a discount. The buyer earns a return; the supplier gets paid immediately. This is what Discount Flow offers under the No Cost Enterprise Plan — available to suppliers, with no ERP integration.
2. Reverse Factoring (Bank-Funded)
Also called “approved payables finance.” A bank pays the supplier early on the buyer's behalf, using the buyer's credit rating. The buyer repays the bank on the original invoice due date. Requires a bank programme (6–18 months to set up) and is typically only available to large tier-1 suppliers.
3. Refundable Customer Deposit
A buyer advances a lump sum to their supplier at an agreed annual interest rate. The supplier repays the deposit plus Interest at the end of the agreed term (6 or 12 months). This is what Discount Flow's Profit Flow product documents — both parties e-sign the agreement.
Why Traditional Supply Chain Finance Excludes Mid-Market
Bank-arranged supply chain finance programmes have significant barriers for mid-market companies:
- → Time: Implementation typically takes 6–18 months, involving legal agreements, ERP integration, and bank credit reviews.
- → Scale: Banks focus on large enterprise buyers where programme volumes justify the setup cost.
- → Supplier tiers: Even when a programme exists, it typically covers only tier-1 (largest) suppliers.
- → Technology: Legacy bank portals often require outdated ERP integrations and provide poor user experiences.
The Platform-Native Alternative
Discount Flow gives mid-market companies direct access to supply chain finance benefits — without a bank programme, without an ERP integration, and without a 6-month implementation.
< 1 day
Time to implement
$0
Cost to suppliers
~24%
Est. Annual % on a 2% early-payment discount
Profit Flow — Structured Deposit Finance for Trading Partners
Beyond dynamic discounting, Discount Flow's Profit Flow product documents a Refundable Customer Deposit between a buyer and a supplier they already trade with. The buyer advances a lump sum; the supplier holds and uses the funds; the supplier repays the deposit plus Interest at an agreed annual rate at term-end. Terms of 6 or 12 months. Featherbrooke at no time receives, holds, or transfers the deposit. Both parties e-sign the agreement. Not FDIC-insured. The buyer bears the credit risk of the supplier.
This is particularly useful for buyers deploying idle working capital with suppliers they already trade with, and for suppliers who benefit from predictable, structured working capital.
About the author
Kevin Potter · Discount Flow
Kevin Potter leads Discount Flow. He is a finance and strategy executive based in San Diego, California, and studied at Edinburgh Business School, Heriot-Watt University. Kevin is a Chartered Accountant, has a Masters in Finance and a separate Masters in Risk Management. Trained in big-four accounting and worked up through operational, CFO and CEO roles at mid-size and large corporations across several industries.
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