Islamic Supplier Finance

What is 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

Benefits of the FinShare Solution

  • Allow corporates to manage their Payables Finance and extend payment terms with regional and international suppliers.

  • Facilitate trade and improve payment and financial terms between corporates and their supplier network.

  • Conduct business in a fair and transparent manner. FinShare will guide users through to ensure full understanding of risks and costs.

  • Greater transparency which make everything clear-cut and easy to understand with little room for surprise payments or hidden fees.

Ready to join the FinShare solution?