The Global Trade Supplier Finance (GTSF) Program is a US$1 billion facility that provides short-term financing to suppliers selling to global or domestic corporates by purchasing and discounting invoices accepted for payment by pre-approved participating buyers. IFC provides this financing directly to suppliers via web-based supplier finance platforms or indirectly through financial institutions. By leveraging the credit rating and commercial strength of buyers, GTSF enables access to competitive financing solutions for suppliers, many located in IDA17 countries.
In addition to providing financing, GTSF helps improve sustainability of global supply chains by (i) offering sustainability linked pricing that connects receivable discount rates to environmental and social (E&S) performance of suppliers; and (ii) providing advice directly to suppliers on improving compliance with labor standards, E&S performance, gender inclusion, and development of supply chain decarbonization programs.
Program Structure
Under the program, IFC works with buyers across industries that source goods in emerging markets. IFC can also structure funded or unfunded risk participations with financial institutions that offer supply chain finance and help them increase their presence in emerging markets.
The GTSF Program provides post-shipment finance to suppliers based upon acceptance of receivables by select buyers approved by IFC. This allows suppliers to improve working capital by converting sales receivables to immediate cash and to access lower-cost financing based on the superior credit risk of the buyer. Supplier finance also enables emerging market suppliers to finance open account transactions at competitive rates without collateral requirements, and therefore, levels the playing field among larger and smaller suppliers for access to finance.
Main Features
GTSF partners with buyers to broaden access to finance for suppliers, some of whom otherwise would not be able to obtain financing. Participating suppliers have the option to sell their receivables at an attractive discount rate, based on the buyer’s credit strength, after the buyer has approved the receivable.
IFC also mobilizes private capital through GTSF by partnering with banks and credit insurers and helps global supply chain finance platforms to expand their emerging markets coverage.
The program provides an additional, highly affordable financing that is without recourse and on an unsecured basis to the suppliers.
IFC also provides expertise that enables buyers and participating banks to establish sustainability linked Supply Chain Finance facilities. IFC’s GTSF operations are implemented through electronic supplier finance platforms that is used for the exchange of invoice data between suppliers, buyers and IFC, providing full visibility of the underlying transactions.
Results
Since the Program launch in 2012, IFC’s GTSF program has disbursed US$10.7 billion to over 2,500 suppliers across 28 countries. In FY 2022 alone, GTSF disbursed US$2.3 billion to 352 Suppliers and IDA17 accounted for 68% of all disbursements, while disbursements into facilities that utilize sustainability linked pricing accounted for 66% of the total.