What to look for when choosing a supply chain finance partner

Supply chain finance looks like a commodity from the outside. Every lender promises to pay your suppliers sooner and give your distributors longer to pay. The difference shows up eighteen months in, when volumes have grown, a few counterparties have wobbled, and the programme either scales with you or quietly becomes an operations problem.

Here is what we would test before committing.

1. How the programme is underwritten

Ask whether limits are underwritten against the anchor's credit or against each counterparty individually, and what happens when a distributor outgrows its initial limit. A programme that requires a fresh credit process for every increase will throttle your best-performing partners exactly when they are growing fastest.

2. Time from onboarding to first disbursement

Measure it in days, end to end, including KYC and documentation — not from "sanction" to disbursement. Distributors abandon onboarding when it stretches across weeks, and an unused limit does nothing for your sales cycle.

3. Depth of integration

The programme should read your invoice and dispatch data rather than asking your team to re-key it. Ask specifically:

• Does the lender consume your ERP or DMS data directly, and through what interface?
• Is reconciliation automatic, or does someone on your finance team match payments by hand?
• Can your regional sales team see live limit and utilisation data, or do they have to ask?

4. Reach beyond Tier 1

Most programmes work adequately for large Tier 1 distributors who already have audited financials and banking relationships. The value sits deeper in the network — Tier 2 and Tier 3 counterparties, who are usually the ones actually constrained by working capital. Ask what proportion of the lender's existing book sits outside the top tier.

5. Behaviour under stress

The least comfortable question is the most useful one: what happened to the lender's existing programmes during the last downturn? Were limits withdrawn across the board, or assessed counterparty by counterparty? A financing partner that pulls back indiscriminately transfers its risk straight onto your distribution network.

The short version

Integration quality and consistency under stress matter more than the headline rate. A programme half a percent cheaper that takes three weeks to onboard a distributor, and that your finance team reconciles by hand, is not cheaper.