February 23, 2024 | Raistone

What is sustainable finance, and how can it benefit your company?

There is a growing realization that sustainable business practices can create long-term value for companies, their employees, and investors. By integrating sustainable practices and considerations into their strategies, companies can drive innovation, enhance operational efficiency, attract and retain talent, and build stronger relationships with customers and the communities they serve.

Over the past two decades, there has been a significant shift in the way companies and investors perceive their role and impact on the world. This shift represents a departure from a purely profit-driven mindset to one that incorporates broader considerations of their actions and decisions on the people they serve and the environment around them

There is a growing realization that sustainable business practices can create long-term value for companies, their employees, and investors. By integrating sustainable practices and considerations into their strategies, companies can drive innovation, enhance operational efficiency, attract and retain talent, and build stronger relationships with customers and the communities they serve.

At Raistone, we have witnessed this shift first-hand, given our close engagement with small-to-medium sized businesses, as well as our deep partnerships with many of the largest B2B software platforms globally. Because of our unique position in the market, we have visibility into both sides of the supply chain and can see how the focus on sustainability is changing the way businesses interact with one another.

This change is challenging us to rethink how we design products and solutions for our customers, and how we incorporate capabilities that resonate with helping them become more sustainable.

By reducing inefficiencies and promoting a healthier cash balance, sustainable finance from Raistone represents a way for companies to not only drive revenue and profit, but also ensure their employees, customers and investors are happy and healthy. And by working with procurement platforms that can spotlight environmentally conscious suppliers and businesses, Raistone makes it easier for companies to “go green” within their supply chain, finding partners that are aligned with their own corporate goals.

Read on to learn more about how Raistone helps companies do well, by doing good:

Middle market and enterprise customers are looking for ways to incentivize sustainable behavior within their supply chain

Businesses recognize that the larger and more complex their supply chains, the higher the potential for hidden risks. While procurement and sourcing software has helped to provide better visibility into potential supply chain issues and mitigate some of those potential challenges, companies continue to look for ways to incentivize their suppliers to act in accordance with their stated sustainability goals.

One way to achieve this is through a sustainable Supply Chain Finance program. Supply Chain Finance (SCF) is a financing solution that allows buyers to maintain or extend payment terms with suppliers to improve cash flow, while simultaneously giving those suppliers the ability to get paid early at a small discount.

Sustainable SCF programs can take this a step further by giving suppliers improved pricing if they meet certain sustainability objectives. Suppliers that have stated energy efficiency goals, human rights and labor standards, or anti-corruption protocols, for example, may be eligible for better financing rates. The arrangement gives suppliers access to capital when they need it at affordable rates, while the buyer helps improve supply chain resiliency and overall financial health.

Small businesses have adopted sustainable policies as a means to attract and retain more customers

Sustainability standards are no longer just for the large, global, publicly traded companies. They have increasingly become a focus and priority for small- and medium-sized businesses, as these companies have realized that prioritizing sustainability, they can make them more attractive to their customers, employees, and investors.

Many sustainability-focused companies that we work with at Raistone leverage Accounts Receivable Finance, which gives them a non-debt solution to get paid early on outstanding customer invoices. With this immediate access to capital, companies can gain the financial flexibility to invest in sustainable practices and technologies. Accelerating cash flows enables swift implementation of environmentally friendly initiatives, ranging from the adoption of renewable energy sources to the integration of eco-friendly technologies into operational processes.

Software platforms providing solutions to B2B buyers and sellers are expanding their capabilities to support increased visibility and transparency within their ecosystems

B2B software providers and platforms (e.g., AP automation and procure-to-pay) that provide solutions to improve procurement processes, trading partner collaboration, and supply chain visibility have increasingly added capabilities to facilitate sustainability initiatives. These platforms have recognized the shifting priorities of their clients, and by including features that enhance visibility and transparency, they are helping companies make more informed decisions about their suppliers and partners.

Raistone works with these software companies to provide embedded finance and payments in their platforms, directly helping to provide a connection between the physical and financial supply chains. By leveraging these integrations, customers utilizing such a platform can unlock new opportunities to incentivize sustainability within their supply chains. For example, they can start coupling environmental and social data with financing options, offering favorable terms or incentives to suppliers with higher sustainability ratings or environmentally friendly policies. This approach not only encourages suppliers to adopt more sustainable practices, but also provides tangible benefits to buyers, such as improved access to financing for eco-friendly initiatives or products.

Raistone stands at the forefront of sustainable finance, offering dynamic solutions in both Supply Chain Finance and Accounts Receivable Finance. Our approach empowers companies to embrace sustainable financial strategies and optimize cash management efficiency throughout their operations.

In the realm of Supply Chain Finance, Raistone serves as a catalyst for larger corporations seeking to streamline their supply chain dynamics. By ensuring prompt payments to suppliers and mitigating operational risks, Raistone fosters extended cash cycles, laying the groundwork for sustained business growth and resilience.

Conversely, Accounts Receivable Finance equips smaller enterprises with the means to accelerate the collection of outstanding payments. Through this streamlined process, businesses inject liquidity into their operations swiftly, enabling agile reinvestment of funds and fortifying long-term sustainability initiatives.

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