Supply Chain Financing (SCF) and Letters of Credit (LC), also known as Documentary Credits, are both financial instruments used in Financing trade, but they serve different purposes and have distinct mechanisms. While SCF focuses on improving cash flow and working capital within the supply chain, LCs are primarily used to ensure payment security in international trade transactions.

Supply Chain Financing (SCF)

SCF is designed to optimize the working capital and cash flow of companies for both suppliers and buyers. Supplier invoices to the buyers can be financed by utilizing higher creditworthiness of the buyer. It helps suppliers get paid faster while buyers get to extend their payment terms.

Letters of Credit (LC)

LCs are used to mitigate the risk in international trade by providing a guarantee of payment from the buyer’s bank to the seller, contingent upon the fulfillment of specific terms and conditions as stipulated in the LC.

The buyer’s bank issues an LC, promising to pay the seller upon presentation of specified documents (e.g. bill of lading, invoice, etc). This ensures that the seller gets paid once they fulfill their contractual obligations. LCs provide a high level of security for both parties, as the payment is guaranteed by the bank, reducing the risk of non-payment from the buyer.

Choosing between DigiWins and a traditional bank for Supply Chain financing solutions depends on your specific needs and preferences. Good news is by connecting to DigiWins, with our multi-banking platform you will always have the easy access to banks should you need to utilize your already established financing relationship at leading banks.

Nevertheless, here are some benefits connecting to DigiWins:

• Multiple Bank Access: Connect with several banks through a single platform, offering more options and potentially better terms.
• Dynamic Discounting: Utilize your own funds for financing, which can be more flexible.
• Consolidated View: Manage and view all your financing activities across different banks in one place.
• Supplier Onboarding: Streamlined onboarding and KYC processes for suppliers.

Ultimately, it might be beneficial to explore both options and see which one aligns best with your business goals and operational needs.

DigiWins self on-boarding portal for Buyers and Suppliers make it easier. DigiWins compliance to Open Banking Standards make the technical connectivity seamless and quick. Suppliers are able to submit invoice data in their native format leaving the complex transformation, standardization and integration to DigiWins data transformation engine. End-to-End on-boarding process can be completed within few days.

DigiWins employs several measures to ensure the confidentiality of the information shared and to protect sensitive data: Encryption: Data is encrypted both in transit and at rest to prevent unauthorized access.

• Access Controls: Strict access controls ensure that only authorized personnel can access sensitive information.
• Regular Audits: Regular security audits and compliance checks help identify and mitigate potential vulnerabilities.
• Data Anonymization: Sensitive information (e.g. rates offered, pricing, etc) is anonymized to protect individual identities.

In addition, DigiWins flexible hosting models support Private VDC (Virtual Data center) by offering a dedicated and isolated virtual environment within a cloud infrastructure. It allows Buyers and Suppliers to create a dedicated, customized and secure virtualized hosting with a high degree of control over resources, security, and performance.