When it comes to supply chain finance programs, one refers to initiatives driven by companies at the end of the supply chain, the drivers of which are a combination of the pursuit of its own financial targets (mainly improvement of its net financial position) and objectives to support the supply chain. The implementation of these initiatives also bears the limitations of the instruments used and the financial partners involved.
The concrete result consists of solutions tailored mainly to larger suppliers and based on continuous factoring contracts between supplier and bank, which carry with them a variety of fixed costs (processing fees, account maintenance, etc.) and variable costs (commissions on turnover) and limit supplier's freedom of negotiation.
Polaris adopts a different approach, where the lead company's initiative is achieved through ways that do not bind the supplier and nevertheless allow him to benefit from the advantages of participating in the supply chain finance programme, usually through the possibility to easily transform his trade credit into cash.
Another interesting characteristic of Polaris consists in its ability to include also more modest suppliers, due to the centralisation and engineering of the platform accession process, which replaces the process usually individually carried out (and often in non-digital mode) by individual partner banks.
The combination of these qualities makes Polaris the best supply chain finance solution available on the market from a supplier's point of view. In a nutshell, for suppliers, participation in supply chain finance programmes managed on Polaris results in a number of important benefits:
No credit investigation: it is the customer who makes his credit available to the supplier and certifies the enforceability of his debt. Whoever buys the supplier's invoices only takes a risk towards the customer.
Pay per use: no fixed, one-off or periodic costs. There are no processing fees, no account maintenance, no charges of any kind. The supplier pays the discount only for the invoices he intends to sell and, solely in that case, a commission for the use of the platform.
A competitive marketplace: Polaris allows the supplier to access offers from all potential buyers of the customer's passive invoices, each with its own price, and to select the one he prefers.
No obligation of use or duration: the supplier can leave, at any time, the platform without penalty. In any case, there is no obligation of continuous assignment to anyone.
Liquidity, not debt. The assignment transactions entered into on Polaris are all without-recourse assignments, not a financing that increases suppliers' debt.