JP Morgan has signed a US$450mn supply chain finance facility to benefit the small and medium-sized suppliers of industrial machinery manufacturer Caterpillar.
The bank will use the funds to purchase accounts receivable owned by suppliers and due from Caterpillar which are related to the purchase of goods by Caterpillar for its export-related operations.
The facility will increase liquidity and working capital in Caterpillar’s supply chain, and exporters have the option to extend payment terms without causing financial disruption amongst their suppliers.
The deal has been guaranteed by the Export-Import Bank of the US (US Exim) under the bank’s supply chain finance guarantee.
“We are proud to have the opportunity to build upon our existing supply chain finance programme with Caterpillar by working with US Exim to provide additional financial capacity to Caterpillar’s qualified US suppliers,” says Dani Cotti, global trade executive at JP Morgan.
“Caterpillar’s suppliers are currently seeing cash flow improvements and working capital benefits as a result of discounting their accounts receivables in exchange for faster payment,” Cotti adds.