Islamic Supplier Finance
Islamic Supplier Finance (ISF), known as MURABAHA derivative against confirmed payables, is a financial instrument designed to facilitate cash advances to a supplier via commodity transactions while prohibiting the payment or receipt of interest (RIBA) under Sharia compliant guiding principles and guided by Sharia scholars.
ISF is a program anchored by Buyer that its trading partner gets finance against confirmed payables under the Buyer’s credit via Cost-Plus Model complied with Islamic ruling. Additional level of credit control over the individual supplier level is also allowed with flexible limit control.
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1. a) Supplier uploads invoice with mandatory buyer confirmation, or b) Buyer uploads confirmed payables 2. Supplier request discount 3. a) Bank purchases commodity from Broker 1 b) Bank resells the commodity to Broker 2 c) Bank advances cashes to Supplier via FinShare 4. Buyer pays at maturity |