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How Earlytrade compares to Supply Chain Finance for Corporates
Supply chain finance is sometimes referred to as reverse factoring as it is a customer driven program. A corporate customer leverages a third party financial institution to advance payment for vendors
CriteriaEarlytradeSCFCommentary
Earnings impact?Earlytrade directly increases EBIT. Earlytrade operates a Value-as-a-Service (VaaS) model which seeks to generate discount income for corporates using the platform. This directly increases gross profit and EBIT. Earlytrade is not a lender and instead facilitates the corporate to make early payments.

SCF generates no P&L impact. SCF seeks to allocate capital themselves and therefore take the financial upside that comes with advancing early payment. SCF drives a one-time cash increase as corporates need to extend payment terms to their vendors from 30 to 60 days in order to drive engagement from their vendors. A practice that is becoming more and more difficult in the Australian and NZ environments.
Ethical in nature?Earlytrade is built to give your vendors the cash flow they need at a discount rate they choose. This ensures vendors only participate when they want and also gives them maximum flexibility to change their discount rate to track the seasonality of their business.

SCF requires its customers to extend their payment terms to their vendors (usually from 30 days to 60 days or 90 days in some cases) as a means of engaging them onto the program. This is generally not received well, especially in the Australian and NZ markets. There can be significant pushback from vendors and even governments which can result in a PR crisis and loss of trust in the market.
Improved vendor relationships?Offering an ethical, on-demand, early payment solution to your vendors where they can participate when they like, at rates they decide only seeks to build trust among your vendors. With Earlytrade: you maintain complete control over your vendor relationships; no changes in terms, contracts or negotiations, and; you decide which vendors are eligible.

SCF typically only works for the few largest vendors in the supply chain. SCF is often less accessible option for smaller suppliers due to the cost to the bank for compliance and onboarding of each supplier. As the corporate customer, you often lose control of the conditions of sale to your vendors. SCF uses ‘push pricing’ where the SCF company tells the vendors what the price is for advanced payment. This is not very engaging for vendors who perceive it to be too expensive.
Easy vendor onboarding?Earlytrade's intuitive trading dashboard & email based offer process means no complicated vendor onboarding is required. Earlytrade's vendor engagement team supports all vendors and there is ZERO additional head count or internal resources needed to run the program.

SCF has traditionally performed poorly at supporting many fragmented businesses. SCF typically places a heavy load of onboarding with the corporate customer. It often takes 1-2 years before you realise there is very little take up on the SCF program.
Large implementation effort?Earlytrade is a standalone web-based platform and can be up and running in a matter of days. There is no complicated systems integration. Earlytrade does not 'touch the money' meaning there is no change to existing payment or invoicing process. We don’t force customers to adopt new systems or complicated processes - Earlytrade fits around you. Most importantly, it's pain free for vendors. Our intuitive trading dashboard & email based offer process means no complicated vendor onboarding is required.

SCF requires an enormous change to your payment process because instead of paying your vendors, now you must pay a third party SCF company or bank. This requires a complex systems integration and restructure of you IT and finance systems. This typically take 3-4 months, if done flawlessly. Furthermore, this implementation cost/risk/effort is unjustified as the SCF company takes the financial upside for advancing payment to your vendors.
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EARLYTRADE
Level 3, 223 Liverpool Street
Darlinghurst NSW
Australia 2010
hello@earlytrade.com