Working capital product

One programme, two balance sheets improved at once.

Supply chain finance is arranged by the buyer for the benefit of its suppliers. The supplier is paid early at the buyer’s credit rating, and the buyer keeps its own payment terms. Both sides gain, which is why it exists.

Last reviewed 8 September 2026

Indicative interest cost

Weekly

Disclaimer

$69/week

$300 /month $3,600 a year while drawn

Facility limit $80,000

$5,000 $500,000

Average drawn balance $40,000

Nothing drawn Fully drawn

Indicative rate 9.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

The short version

Five lines that explain the arrangement.

The buyer sets it up, the supplier uses it. That inversion is the whole product. A supplier cannot arrange one alone, however much it would like to.
Pricing follows the buyer’s credit. A small supplier gets funding at a large company’s rate, which is ordinarily far better than anything it could arrange on its own ledger.
It starts at invoice approval. Once the buyer approves an invoice, the payment obligation is certain, which is what makes the funding cheap. Before approval there is nothing to fund.
The buyer keeps its terms. The funder pays the supplier early and is repaid by the buyer on the original due date, which is why the buyer’s cash position is unaffected or better.
Indicative only. Every figure here is illustrative. Actual discounts and terms come from the programme after assessment.

The mechanism

What happens after an invoice is approved.

The supplier invoices the buyer as normal. The buyer approves the invoice through its own accounts payable process, which converts it from a claim into an accepted obligation, and the approved invoice appears on the programme platform.

At that point the supplier chooses. It can wait for the original due date and be paid in full, or take payment immediately at a discount. The discount is calculated on the buyer’s credit standing and the days remaining, which is why it is ordinarily a fraction of what the supplier would pay for its own receivables facility.

The funder is then repaid by the buyer on the original due date. Nothing about the buyer’s payment timing changes, which is what makes the arrangement attractive to it, and the supplier has had the money for the intervening weeks.

Day 0

Invoice submitted

On approval

Available to fund

Supplier chooses

Early payment or wait

Original due date

Buyer pays the funder

Two views

What each side is actually getting.

The supplier

Cheap money it could not otherwise reach.

A small New Zealand supplier funding its own receivables pays a rate reflecting its own size, history and customer concentration. On a programme it pays a rate reflecting the buyer’s, and the difference is frequently several percentage points.

It is also selective and uncommitted. Each approved invoice can be taken early or left, with no facility to maintain, no security to grant and no minimum volume. A supplier can use it in a tight month and ignore it in a comfortable one.

What it does not do is help before approval. Where a buyer takes three weeks to approve invoices, those three weeks are unfunded, and that is worth raising with the buyer rather than accepting as fixed.

The buyer

Supplier stability without spending cash.

The buyer keeps its payment terms and its cash, while its suppliers get paid quickly. That reduces the risk of a supplier failing, which is a real operational exposure in a concentrated supply chain and a cost the buyer would otherwise bear.

It also gives the buyer a defensible position when extending terms. Moving from thirty days to sixty is ordinarily resisted, and moving to sixty while offering payment in three at a modest discount is a different conversation.

The programme costs the buyer little directly, since the discount is borne by the supplier that chooses early payment. What it costs is the effort of running it, which is why programmes exist mainly among larger buyers.

Worked example

An $80,000 invoice on 60-day terms.

A component supplier invoices a large manufacturer $80,000 on 60-day terms. The invoice is approved on day 8 and appears on the programme, with 52 days remaining until the due date.

The supplier takes early payment on day 9. At an indicative programme discount priced against the buyer’s credit, the cost of taking the money 51 days early is in the order of $1,000, so roughly $79,000 lands the next day.

The comparison is not against being paid in full on day 60. It is against what the supplier would otherwise do, which is fund the gap on its own receivables facility at a considerably higher cost, or simply be short for seven weeks. Against either, $1,000 is a good trade, and it is available invoice by invoice with nothing to commit to.

Illustrative figures

Invoice value: $80,000
Approved on: Day 8
Days brought forward: 51
Indicative discount: ~$1,000
Received: ~$79,000 on day 9

Illustrative on stated assumptions and rounded. Not a quote or offer of credit.

Against the alternatives

How it differs from funding a ledger.

A supplier with access to a programme and a receivables facility has a genuine choice, and the two behave quite differently.

Feature	Supply chain finance	Invoice finance	Early settlement discount
Arranged by	The buyer	The supplier	Negotiated directly
Priced against	The buyer’s credit	The supplier’s position	Whatever is agreed
Relative cost	Lowest	Higher	Frequently the highest
Covers which customers	Only the participating buyer	The whole ledger	Whoever agrees
Commitment	None, invoice by invoice	A facility with terms	None
Available before approval	No	Yes	No

The fourth row is the practical limit. A programme covers one customer, so a supplier with several large accounts still needs its own facility for the rest of the ledger.

The fair criticism

A programme can be used to make longer terms palatable.

The arrangement is genuinely good for suppliers when it is added to existing terms. It is a different proposition when it arrives alongside an extension from thirty days to ninety, because the supplier is then paying a discount for something it previously had for nothing. Both versions look identical on the platform. The question worth asking when a programme is offered is whether payment terms are changing at the same time, and what the position would be if the programme were declined.

What to look at

Four things a supplier should establish before joining.

Whether terms are changing

A programme offered alongside longer payment terms is a different arrangement from one offered on existing terms. The two are worth separating in the conversation and in the arithmetic.

How long approval takes

The funding window starts at approval rather than at invoicing. Where approval routinely takes three weeks, a large part of the wait is outside the programme and unfunded.

The discount, in dollars

Programme pricing is quoted in several ways. Asking for the cost in dollars on a typical invoice at a typical number of days is what makes it comparable with the supplier’s own facility.

Whether it affects an existing facility

Invoices funded through a programme may sit outside a receivables facility’s borrowing base. Where a supplier already has debtor finance, the interaction is worth checking with that funder first.

The trade

What it gives a supplier and what it costs.

What it gives

Funding priced against a much stronger credit than the supplier’s own
No facility to establish, no security to grant and no minimum volume
Selective use, invoice by invoice, with no commitment either way
Certainty, since the invoice is already approved before it can be funded
A cost that is ordinarily well below any facility the supplier could arrange alone

What it costs

A discount on invoices that would otherwise have been paid in full
Coverage of one customer only, so a wider ledger still needs its own facility
No help at all in the period before the buyer approves the invoice
Dependence on a programme the buyer controls and can change
A possible interaction with an existing receivables facility that has to be checked

The New Zealand position

Why these programmes are less common here.

Supply chain finance is a scale product. Running a programme requires a buyer large enough to justify the platform, the funder relationship and the administration, and New Zealand has relatively few businesses of that size compared with the markets where the product developed.

Where they exist here, they cluster around large retailers, food and beverage manufacturers, infrastructure contractors and government-adjacent buyers. A supplier into one of those may well be offered a place on a programme, and a supplier into the general economy is unlikely to encounter one.

For a business without access to a programme, the practical version of the same idea is a negotiated settlement discount with a large customer. It achieves something similar with no platform involved, and the arithmetic is worth doing carefully, because a 2% discount for paying thirty days early is a great deal more expensive than it sounds when expressed annually.

What to watch

Three ways this becomes less attractive.

Terms extend after the programme starts

The programme arrives on existing terms and the terms lengthen a year later, so the supplier is now discounting to reach a position it once had by default.

What happens:A slow conversion of a benefit into a cost, which is hard to object to once the programme is established.

Approval slows

The funded window runs from approval, so a buyer whose approval process lengthens shifts more of the wait into the unfunded period without changing anything visible.

What happens:A programme that looks unchanged and delivers less, which is worth measuring rather than assuming.

The programme is withdrawn

The buyer controls it and can change or end it. A supplier that has come to rely on early payment finds its cash cycle lengthening on someone else’s decision.

What happens:A funding source that was never the supplier’s to keep, which is the argument for maintaining a facility of its own alongside it.

The third is the reason a programme is best treated as an improvement rather than as infrastructure. A supplier whose only funding is a buyer’s programme has outsourced its working capital to a party with different interests.

For comparison

What the supplier’s own facility would cost.

The comparison that decides whether a programme is worth using is against what the supplier would otherwise pay to fund the same gap. This is that figure. Indicative only, and not a quote or offer of credit.

Indicative interest cost

Weekly

Disclaimer

$69/week

$300 /month $3,600 a year while drawn

Facility limit $80,000

$5,000 $500,000

Average drawn balance $40,000

Nothing drawn Fully drawn

Indicative rate 9.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

References

Sources

Ministry of Business, Innovation and Employment
Context for New Zealand policy work on business payment practices and payment times.
Commerce Commission
The regulator whose guidance covers conduct between businesses of unequal bargaining power.
External Reporting Board
Context for how supplier finance arrangements are disclosed in financial statements.
Companies Office
The register used to confirm the entities participating in a programme.
Financial Markets Authority, financial advice
Backs the distinction between general information of this kind and regulated financial advice.

FAQ

Supply chain finance in New Zealand, questions answered

What is supply chain finance?

A programme arranged by a buyer that lets its suppliers take early payment on approved invoices at a discount priced against the buyer’s credit rating. The funder pays the supplier early and is repaid by the buyer on the original due date.

Can a supplier arrange one?

No. The programme depends on the buyer’s credit standing and its approval process, so it has to be arranged by the buyer. A supplier wanting something similar on its own would be looking at invoice finance instead.

Why is it cheaper than invoice finance?

Because the invoice has already been approved by a buyer whose credit is stronger than the supplier’s, so the funder is taking a much smaller risk. The pricing follows the buyer rather than the supplier, which is the whole advantage.

Does the supplier have to use it on every invoice?

No. It is ordinarily selective and uncommitted, invoice by invoice, with no facility to maintain and no minimum volume. A supplier can use it in a tight month and ignore it otherwise.

What happens before the invoice is approved?

Nothing. The programme only reaches approved invoices, so the period between issuing and approval is unfunded. Where approval routinely takes weeks, that gap is worth raising with the buyer directly.

Is it a loan to the supplier?

It is ordinarily structured as an early payment of a receivable rather than as borrowing by the supplier, which is part of its appeal. How any particular arrangement is characterised for accounting purposes is a question for the accountant.

Why do buyers set them up?

To keep suppliers financially stable without spending their own cash, and in some cases to make longer payment terms acceptable. The first is a genuine benefit to both sides and the second is worth identifying when a programme is offered.

What should a supplier check before joining?

Whether payment terms are changing at the same time, how long approval takes, the discount expressed in dollars on a typical invoice, and whether funded invoices interact with any existing receivables facility.

Does it affect an existing debtor finance facility?

It can. Invoices funded through a programme may fall outside the borrowing base of an existing facility, which reduces availability elsewhere. Checking with the existing funder before joining avoids an unwelcome adjustment.

Are these common in New Zealand?

Less common than in larger markets, because a programme needs a buyer of considerable size to justify it. They cluster around large retailers, manufacturers, infrastructure contractors and government-adjacent buyers.

What is the alternative for a smaller supplier?

A negotiated settlement discount with a large customer achieves something similar without a platform. The arithmetic deserves care, because a discount for paying a month early is considerably more expensive than it sounds once expressed annually.

Is this page financial advice?

No. It describes how a product works in general terms. This site is not a lender, a broker or a registered financial adviser, and whether a programme suits a particular business depends on facts a website cannot see.