A first service compliant with participation banking principles: Supplier Financing

Standing out with its innovative products and services, Kuveyt Türk has introduced its Supplier Financing service with its early collection benefits for the supplier and flexible payment benefits for the buyer.


Stating that it is Kuveyt Türk that is the first participation bank that has introduced the Online Financing products to its clients, Ufuk Uyan, General Manager, said “Financing the real economy directly, we are contributing to the enterprises enabling them to maintain their manufacturing activities without getting into financial trouble.”

Leading participation bank in Türkiye, Kuveyt Türk offers special opportunities to its SME and commercial clients with its innovative products and services. One of the newest products of the Bank, Online Supplier Financing offers early collection benefits for the supplier and flexible payment benefits for the buyer.

Emphasizing that the Supplier Financing is an innovation with its structure compliant with interest free participation banking, Ufuk Uyan, General Manager of Kuveyt Türk, was quoted as saying “We are pleased to have introduced another innovation that will make business life of our clients easier. We have set the motto for the Supplier Financing as “Both parties  are satisfied!”. Through the Supplier Financing, the suppliers are enabled to receive the cash out of their receivables at a maturity set by them thus getting rid of any liquidity trouble. On the other hand, the corporate and large size buyers purchasing goods from suppliers enjoy flexible payment terms and we help them maintain uninterrupted supply of goods through efficient purchase method.

How the system works?

Pointing out that they have contributed to the production activities of the enterprises by directly financing the real economy, Ufuk Uyan, General Manager of Kuveyt Türk explained the Supplier Financing system with an example: 

“Lets take a supplier of roller bearings and a manufacturer of durable appliances. The supplier will sell roller bearing to the manufacturer agreeing on price and payment maturity of 6 months.  However, the supplier is willing to cover its cash needs as soon as possible by collecting its receivables without waiting for the occurrence of the 8-month maturity after its has supplied the products. The buyer is not able to make payment in cash to the supplier as it is financially unable to do so. At this point, murabaha-based Supplier Financing service of Kuveyt Türk sets in. Order details are transferred to Kuveyt Türk’s system through internet branch or FTP file sharing system. Our bank quotes a price for the goods to the supplier as per murabaha method (buying in cash and selling on profit) over a maturity of 6 months agreed by the buyer and supplier. If the suppliers agreed with the proposal of our bank, it sends the order to our bank for approval. After approval by our bank, the ordered goods are produced / delivered. After the invoice has been issued and ordered goods have been delivered to the buyer, it inspects the goods and approves the invoice through our system and based on such approval, our bank makes advance payment to the supplier as per agreed price and maturity. The buyer makes the payment to Kuveyt Türk upon expiry of 6-month maturity. In other words, our bank purchases the goods needed by the buyer from the supplier in cash and resells it to the buyer as per 6-month maturity agreed by the buyer and supplier. In this way, the supplier collects its receivable in advance without waiting for 6 months and the buyer makes the payment directly to the bank at the maturity. Thus, both the supplier and buyer maintain their activities without getting into financial trouble.”

Benefits of Supplier Financing for the suppliers:

  • Collection in advance of the maturity date
  • Regular cash flow
  • Stronger relationship with the buyer
  • Competitive edge to be enjoyed in purchases in cash thanks to early collection of its receivables
  • Relatively lower financing costs given the creditworthiness of the buyer
  • Financing based on the payment solvency and assignment of receivables

Benefits of Supplier Financing for the buyers:

  • Flexible payment terms
  • Stronger relationship with the suppliers
  • Efficiency in terms of enterprise capital and balance sheet management
  • Process efficiency to reduce the supply chain management cost
  • Ability to negotiate payment and pricing terms with the supplier

Uninterrupted payment process for strategic suppliers