The money that moves through a supply chain does not always appear on corporate balance sheets as a major investment, a debt issuance or a traditional corporate loan. Sometimes, it moves more quietly: through early invoice payments, extended payment terms, digital platforms, financed inventories and agreements between buyers, suppliers and banks.
That universe is known as Supply Chain Finance, or SCF, a tool that has become increasingly strategic for industrial companies, automakers, retailers, governments and suppliers that need liquidity to operate without disrupting production.
In a global economy shaped by logistics pressure, technological competition, nearshoring and industrial relocation, Supply Chain Finance has moved beyond a back-office financial mechanism. It is now a central piece of competitiveness. Whoever controls cash flow across an ecosystem can also influence costs, timing, inventories and growth capacity.
What Is Supply Chain Finance?
Unlike a traditional loan, Supply Chain Finance is based on the commercial relationship between a buyer and its suppliers. The logic is simple: if a supplier has already delivered a product or service and the buyer has approved the invoice, a financial institution can advance the payment to the supplier and later collect from the buyer.
The best-known model is reverse factoring. Under this structure, the supplier receives immediate liquidity, the buyer keeps a longer payment term and the bank reduces its risk because it is financing an invoice backed by a company with a stronger credit profile.
In practice, the mechanism allows a small or midsize business to get paid earlier without relying on a traditional bank loan, while a large corporation can optimize working capital without interrupting operations. The entire chain gains stability because the supplier has the resources to produce, deliver and keep operating.
Beyond reverse factoring, other instruments include traditional factoring, dynamic discounting, inventory financing, purchase order financing and digital SCF platforms that use electronic invoicing, data analytics and artificial intelligence to accelerate approval and financing processes.
Mexico and NAFIN: A Pioneering Case
Mexico holds an important place in this story thanks to Nacional Financiera’s Cadenas Productivas program. International organizations have recognized NAFIN as a pioneer in reverse factoring services for small and midsize enterprises through a public electronic financing platform. The World Bank has described the program as an initiative focused on providing financing to domestic SMEs through reverse factoring, training and technical assistance.
The Mexican model allowed suppliers of major public and private buyers to receive early payment on approved invoices. Instead of waiting weeks or months to be paid, an SME could turn an approved invoice into near-immediate liquidity.
The case is especially important because it addressed one of Latin America’s structural business-financing problems: many small companies cannot access affordable credit based on their own financial profile, but they can obtain better conditions when their invoice is backed by a large, creditworthy buyer.
In sectors such as energy, government, retail, manufacturing and automotive, this mechanism has helped sustain suppliers that would otherwise face cash pressure to buy inputs, pay payroll or fulfill new orders.
Mexico’s lesson is clear: when supply chain financing is well designed, it does not only improve corporate balance sheets. It also strengthens the productive fabric.
The Americas: Working Capital as an Operating Advantage
In the United States, Brazil and other markets across the Americas, Supply Chain Finance has become a common tool for large corporations, agribusinesses, exporters and manufacturers. In these markets, the goal is not only to accelerate payments, but to manage increasingly complex cash cycles more efficiently.
Large companies seek to extend payment terms without suffocating their suppliers. Suppliers need liquidity to produce without carrying the financial cost of waiting. Banks and specialized platforms find a business opportunity inside that tension.
In Brazil, for example, supply chain financing plays a strong role in agribusiness, logistics and exports, where producers, cooperatives and logistics providers need capital before sales cash flow materializes. In the United States, large buyers have made these programs part of their treasury and procurement strategies.
In every case, the underlying question is the same: who finances the time between delivering a product and getting paid?
BYD: When the Supply Chain Becomes Strategic Muscle
The case of BYD takes this discussion to another level. The Chinese company is not just an electric vehicle manufacturer. It is a deeply integrated organization that produces batteries, semiconductors, electric motors, electronic systems, energy storage solutions and critical components for its vehicles.
That vertical integration allows BYD to reduce dependence on external suppliers, control costs and respond quickly to global demand for electric vehicles. But its growth cannot be explained by technology or manufacturing alone. It also reflects an aggressive and sophisticated approach to working capital management.
One of the most debated aspects of BYD’s financial model has been its relationship with suppliers. Reuters reported that in 2024, BYD took an average of 127 days to pay suppliers and short-term creditors, compared with an average of 108 days across China’s auto industry. The same reporting noted that many global manufacturers typically pay in less than 90 days, and that payment terms under 60 days are also common.
From a financial perspective, long payment terms work as a source of operating financing. If a company buys billions of dollars in components and pays months later, it preserves cash for longer. That capital can be used to open factories, fund research and development, support international expansion or reduce the need for bank debt.
The problem is that this efficiency for the buyer can become pressure for the supplier. When payment terms stretch too far, suppliers end up partially financing the growth of the dominant company. In a complex industrial chain, that imbalance can affect liquidity, investment, quality and innovation.
China Puts Limits on Supply Chain Finance
China’s case shows how far supply chain financing can go when it collides with an industry locked in a price war. Competitive pressure in electric vehicles pushed several manufacturers to extend payment terms, demand discounts and transfer financial stress to suppliers.
In 2025, major Chinese automakers, including BYD, Chery, Xpeng, Xiaomi, GAC and FAW, pledged to pay suppliers within 60 days in response to criticism, regulatory pressure and new rules on payments to small and midsize companies.
Specialized media reported that China’s regulation to guarantee timely payments to SMEs took effect on June 1, 2025, requiring large companies to pay for goods, projects and services within 60 days of delivery or acceptance.
The reaction was significant. The debate made clear that Supply Chain Finance can be a tool for competitiveness, but also a systemic risk if it becomes a way to push financial pressure onto smaller suppliers.
Reuters reported in February 2026 that China’s auto association found most major manufacturers had largely met their 60-day payment commitments, with an average payment period close to 54 days.
The adjustment points to a new stage: supply chains will no longer be evaluated only by efficiency, cost or speed, but also by the financial health of their suppliers.
Mexico and China: Two Very Different Models
Mexico and China represent two very different ways of understanding Supply Chain Finance.
The Mexican model, led by NAFIN, was born from a financial-inclusion logic. Its goal has been to help small and midsize businesses turn invoices into liquidity by leveraging the credit strength of large buyers.
The Chinese model, especially in sectors such as electric vehicles, operates from an industrial-competitiveness logic. Large corporations such as BYD use vertical integration, scale, supplier management and working capital strategy to accelerate growth, reduce costs and compete globally.
Both models have strengths. Mexico shows how a development bank can use financial technology to support suppliers. China shows how an industrial chain can become a platform for global expansion. But both also reveal a shared tension: supply chain financing is sustainable only when it does not sacrifice the weakest links.
The New Frontier of Working Capital
Supply Chain Finance can no longer be understood as a technical tool reserved for corporate treasury departments. It is an invisible infrastructure that defines who can produce, who can grow, who can survive a crisis and who is left out of a global chain.
For SMEs, it can mean immediate liquidity. For large corporations, financial optimization. For banks, lower credit risk. For governments, an industrial policy tool. For economies, a way to sustain more resilient productive chains.
BYD’s case shows that control over the supply chain can become a competitive advantage as important as technology. But it also warns that financial efficiency has limits. A company can grow by using payment timing as leverage, but if that pressure weakens its suppliers, the entire chain becomes more fragile.
At its core, Supply Chain Finance answers an essential question for any productive economy: how to make money move at the speed industry demands.
Mexico responded with a public reverse factoring platform. China responded with massive industrial ecosystems and, more recently, regulation to prevent abuse. The Americas have incorporated it as a common working capital tool.
The future of industrial competitiveness will not depend only on who can manufacture cheaper or faster. It will also depend on who understands how to finance the entire chain without breaking it.
