Global Trade Supplier Finance
Trade & Commodity Finance at IFC
The Global Trade Supplier Finance (GTSF) Program provides short-term financing to suppliers selling to large domestic buyers or exporting to international buyers, by discounting invoices once they are approved by the buyer. IFC provides this financing directly to suppliers via web-based supplier finance platforms or indirectly through financial institutions, helping to address a huge shortfall in access to finance for SMEs.
Under the GTSF program, IFC can link its pricing to suppliers’ environmental and social scorings, as determined by the buyer, and can provide financial incentives to suppliers for improvements in these areas.
Program Structure: Under the program, IFC works with buyers across industries that source goods in emerging markets. IFC can also structure funded or unfunded risk participations with financial institutions that offer supply chain finance and help them increase their presence in emerging markets.
The GTSF Program provides post-shipment finance to suppliers based upon acceptance of receivables by select buyers approved by IFC. This allows suppliers to improve working capital by converting sales receivables to immediate cash and to access lower-cost financing based on the superior credit risk of the buyer. Supplier finance also enables emerging market suppliers to finance open account transactions at competitive rates without collateral requirements, and therefore, levels the playing field among larger and smaller suppliers for access to finance.
- suppliers have the option to sell their receivables at an attractive discount rate, based on the buyer’s credit rating, after the buyer has confirmed payment;
- pricing is determined based on the superior credit risk of the buyer and is more advantageous for smaller suppliers;
- the program provides an additional financing source that is without recourse and on an unsecured basis to the suppliers;
- operations are implemented through electronic supplier finance platforms used for the exchange of invoice data between suppliers, buyers, IFC, providing full visibility of the underlying transactions;
- the program provides support for improvements to environmental and social performance for suppliers selling to select buyers by implementing differentiated pricing schemes.
Since the Program launch in 2012, IFC’s GTSF program has disbursed about US$3 billion to close to 1,000 suppliers across 14 countries. The average invoice size financed was approximately US$13,000, demonstrating the Program’s commitment to supporting SMEs globally.
Interested in learning more about Global Trade Supplier Finance? Contact our team to express interest or get more information.