Supply chains are essential. Just think about what happened when they collapsed during the pandemic. However, they are also complicated, requiring logistics, planning, and strong financial support. Playing a key role in that are the banks that provide tailored financial solutions like accounts receivable financing, equipment loans, and lines of credit. These services help businesses maintain cash flow, invest in growth, and navigate market challenges. And, as supply chains become more complex, banking partnerships are increasingly vital for ensuring efficiency, innovation, and long-term success.
To get a better understanding of how banking is involved in the success of supply chains, I spoke with Curtis Sutherland, SVP of Sales & Business Development at TAB Bank, a 25-year-old bank in Ogden, Utah that specializes in serving small-to-medium businesses nationwide. We spoke about the role of banking partnerships in successful supply chain operations, particularly during volatile and challenging times.
Strong financing, planning, and processes are essential for any business, and supply chains are no exception. However, the importance of continuous funding is a factor that is sometimes underprioritized. Sutherland remarked that robust financial backing is the continuous fuel these systems require to succeed. And it makes sense when you consider every step of a supply chain journey, from factory floors churning out products to high-tech warehouses and bustling marketplaces, is contingent upon the seamless flow and availability of funds. These funds ensure timely operations and act as a buffer during unpredicted market volatility.
Financial providers for supply chain industries understand the specific challenges of these operations, with services such as accounts receivable financing and asset-based lending giving these businesses the liquidity they need to bridge gaps and capitalize on assets. These financial partnerships are more than transactional, showing the commitment banks have to ensure businesses compete at the highest levels.
Banks have been reshaping the narrative around supply chain financing, especially during these post-pandemic times. Through banking services, every company, irrespective of its size or domain, can acquire the financial tools and confidence to navigate the intricacies of the global market. Supply chains and banks have created ways to produce sustainable growth and innovation in business. Here are key ways that banking tools can help supply chains today.
Accounts Receivable Financing or Factoring: By converting invoices into immediate cash, banks can provide businesses the liquidity they need, bridging the gap between shipment and payment. This ensures continuity in operations and offers companies the reassurance that their revenue stream remains consistent, enabling them to confidently engage with suppliers and customers and focus on core operations without being bogged down by delayed payments.
Asset-based Lending: By harnessing the power of a company’s assets, such as inventory or machinery, banks grant loans to bolster supply chain capabilities. This approach allows businesses to maximize the value of their assets, offering a secure and strategic financing option that fosters growth and expansion.
Equipment Financing Services: State-of-the-art equipment is crucial for supply chains. Banks can offer tailored financing options, ensuring businesses have the best tools to operate efficiently. Through these services, companies can keep pace with technological advancements, positioning themselves competitively within the market.
Small Business Loans: Recognizing the critical role of small businesses in the supply chain, banks can provide the capital they need to scale, purchase inventory or address immediate financial needs. These loans can be the lifeblood for small enterprises, enabling them to navigate the complexities of the market and forge strong supplier relationships.
Lines of Credit: Flexibility in finance is essential. Financing companies’ line of credit products offer businesses the financial cushion to manage unpredicted costs without disrupting the supply chain. This flexibility ensures continuity, allowing businesses to address emergent needs or seize sudden opportunities without financial strain.
Real Estate Lending: Real estate forms the backbone of supply chains, from warehouses to retail spaces. Banks’ tailored lending solutions facilitate businesses in acquiring, developing or refinancing properties. Secure and strategic real estate investments can be the difference between a company’s stagnation and growth.
Treasury Management Services: Efficient cash management is paramount in the supply chain. Banking companies offer comprehensive treasury solutions ranging from fraud protection to automated payments, ensuring smooth financial operations. These services optimize cash flow, safeguard transactions and provide businesses with a comprehensive financial overview, driving informed decision-making.
Banking Essentials: Banking essentials such as checking, savings, CDs and other depository products underpin the financial bedrock of supply chain businesses. Whether for short-term operational needs, savings for future investments or leveraging deposits for better interest rates, banks can provide the stability and security that every company in the supply chain ecosystem requires.
Banks are pivotal partners in the complex web of supply chain operations. By offering holistic financial solutions tailored to the unique challenges of the supply chain, they strive to empower businesses to operate more efficiently, innovate confidently and grow sustainably.
