Author: Darren Tredgold, General Manager, Independent Steel Company
Supply chain payments have become the single biggest pressure point for regional distributors in Australia and globally. Managing supply chain payments effectively means the difference between a business that grows and one that stalls, stuck in an endless cycle of chasing receivables while suppliers demand faster settlement.
Steel distributors feel this squeeze more than most. Suppliers want payment upfront or on short terms. Customers expect Net-60 or Net-90. Meanwhile, the distributor carries the gap on their own balance sheet, tying up working capital that could otherwise fund growth, new branches, or better inventory. A steel distributor carrying $2 million in outstanding receivables while owing $1.5 million to suppliers has $3.5 million locked in a cash flow cycle that generates zero return. That capital could be hiring new staff, opening a satellite branch closer to regional customers, or investing in better logistics and delivery infrastructure that improves customer service.
That squeeze is loosening. Financial technology built for B2B supply chains is giving regional distributors tools that were previously only available to large corporates with dedicated treasury teams and seven-figure banking relationships. If you run a distribution business with 20 to 50 staff, these trends will reshape how you manage cash, payments, and supplier relationships over the next two to three years.
The timing matters because the distribution sector is under more financial pressure than it has faced in a generation. Rising interest rates have made borrowing more expensive. Construction activity has become less predictable. Customers are stretching payment terms further while suppliers are tightening theirs. The old model of funding the gap between payables and receivables through an overdraft facility or a business line of credit is getting more expensive and harder to maintain. Fintech offers an alternative path that does not depend on traditional bank lending.
This article breaks down the fintech tools and trends most relevant to distribution businesses, with a focus on practical application rather than theoretical possibility. Each section covers a specific category of fintech innovation, explains how it works in plain language, and outlines what it means for a mid-market distributor trying to compete against larger, better-capitalised national players.
Supply Chain Payments Are No Longer Reserved for Corporate Giants
Supply chain finance used to require a major bank relationship and enterprise-level transaction volumes. Regional distributors were locked out. The onboarding process alone could take months, requiring extensive documentation, credit reviews, and minimum volume commitments that smaller businesses could never meet. If your annual turnover was below $50 million, most banks would not even take the meeting. The programs were designed for companies moving hundreds of millions in annual purchasing volume, not for a regional steel distributor managing a few dozen supplier relationships and trying to keep cash flowing between payables and receivables.
Fintech platforms have changed that equation entirely. Over 60% of new supply chain finance adopters in 2023 were SMEs, driven by digital onboarding that replaces the cumbersome bank-led processes that historically kept smaller businesses on the sideline. The shift happened because fintech providers recognised that the mid-market represented an enormous underserved opportunity. Distributors with $5 million to $50 million in annual revenue were managing their finances with spreadsheets, phone calls, and hope. Nobody had built tools specifically for them.
Now, platforms like C2FO run a marketplace where suppliers can request early payment on approved invoices. Rather than waiting 60 or 90 days for a customer to pay, suppliers set the discount they are willing to accept for early payment. Buyers decide whether to accept. The marketplace clears automatically. Taulia integrates directly into SAP ecosystems with AI-driven analytics that predict optimal payment timing. PrimeRevenue operates as a major global platform connecting suppliers, buyers, and funders across dozens of countries. In India, the Trade Receivable Discounting System processes over $2 billion monthly in MSME financing, showing what happens when technology opens up access to financial tools at national scale.
The common thread across these platforms is speed. What used to take weeks of bank negotiations now takes days or hours. Credit decisions that required relationship managers and committee approvals now happen algorithmically, often in under 24 hours. For a regional distributor, the implication is clear: the barriers to accessing sophisticated supply chain payments instruments have dropped dramatically, and the businesses that take advantage of this shift earliest will gain a measurable edge in working capital efficiency. The cost of inaction is not just missed opportunity. It is falling behind competitors who are already using these tools to move faster and operate leaner.
Reverse Factoring Puts Cash Back in Your Hands Faster
Reverse factoring is the most directly valuable instrument for distributors looking to modernise how they get paid. It sits at the core of modern supply chain payments and addresses the fundamental timing mismatch between when distributors need cash and when their customers are willing to release it. The mechanics are straightforward, even though the name sounds like something from a finance textbook that has nothing to do with your daily operations.
Here is how it works: your large construction company customer initiates the financing. A funder pays you early at a slight discount, and the construction company pays the funder at the original due date. You get cash faster. The buyer extends their payment terms without affecting your cash flow. And credit risk is assessed based on the buyer’s creditworthiness rather than yours.
This last point matters enormously for regional distributors. If you are a $20 million steel distributor selling to a $500 million construction firm, traditional invoice factoring prices your credit risk. That means higher fees, stricter terms, and lower advance rates. Reverse factoring flips this dynamic by pricing the construction firm’s credit risk, which is almost always lower. That translates directly into cheaper financing and better terms for you as the supplier.
For a regional steel distributor, reverse factoring means offering customers competitive 60 to 90-day terms without personally carrying that receivable for months. You get paid in days while your customer pays on their normal cycle. The working capital freed up can fund inventory purchases, new hires, or geographic expansion into areas you previously could not service profitably.
The practical barrier used to be that reverse factoring programmes required the buyer to participate, which meant convincing a large customer to sign up to a new platform. Fintech providers have lowered that barrier by making onboarding simple for buyers and by offering them their own incentives, such as extended payment terms or early payment discounts from their supplier base. Some platforms now onboard a new buyer in under 48 hours, compared to the months it used to take through a traditional bank programme.
The growth numbers tell the story. The global supply chain finance market is expected to exceed $10 billion by 2030, with reverse factoring representing the largest segment. Distributors who modernise their supply chain payments through reverse factoring programmes gain a compounding advantage as their cash conversion cycle shortens and their ability to service larger orders increases without additional borrowing.
B2B Buy Now, Pay Later Is Digitising Trade Credit
Consumer BNPL from Afterpay and Klarna gets the media attention. Yet B2B BNPL is growing far faster and solving a problem distributors deal with every single day: managing trade credit risk while trying to close sales quickly.
The mechanics mirror what consumers experience at checkout, but adapted for business transactions. A BNPL provider pays you immediately when your customer places an order. Your customer then repays the provider in 30, 60, or 90 days. Credit decisions happen in under two seconds using automated underwriting algorithms, and the risk transfers off your books entirely. You never chase the receivable. You never write off a bad debt from that transaction. The BNPL provider absorbs the entire credit function.
B2B BNPL revenues hit approximately $14 billion in 2023 with 106% year-over-year growth. That growth rate dwarfs the consumer BNPL market, which has matured and is growing at single-digit percentages in most markets. Two (formerly Tillit) out of Oslo explicitly targets construction and wholesale verticals, which makes them a natural fit for building material distributors. Billie in Berlin serves over 500,000 business customers across 3,500-plus online stores. Hokodo in London provides pan-European coverage backed by Lloyd’s of London underwriting, giving suppliers confidence that the credit guarantee is financially sound.
These providers are building the infrastructure for a new generation of supply chain payments where the distributor never touches the credit risk at all. Instead of running your own credit department (which costs $80,000 to $150,000 per year in salaries alone for a mid-market distributor), you outsource the entire credit function to a platform that does it faster, cheaper, and at scale. The shift from in-house credit management to platform-based underwriting represents one of the most significant changes in how distributors manage trade credit in decades.
How BNPL Changes the Competitive Landscape for Distributors
Offering B2B BNPL can increase merchant conversion rates by up to 40%. For a distributor, that translates into winning orders from new customers who might otherwise go to a competitor offering better payment flexibility. The conversion lift is especially pronounced for first-time customers who do not yet have an established credit relationship with your business.
Think about this from a practical standpoint. A builder walks into your steel yard needing materials for a new project. They do not have an existing credit account with you. Under the old model, you either demand cash on delivery (which the builder may not have available for a project that has not yet been invoiced) or you run a manual credit check that takes three to five business days. During those days, the builder has already gone to your competitor who offers terms. You lose the sale and potentially the entire customer relationship.
With B2B BNPL integrated into your sales process, that builder gets instant credit approval at the point of sale. You get paid immediately. The BNPL provider manages the receivable. You have eliminated the internal overhead of running credit checks, chasing overdue accounts, and writing off bad debts. The cost of offering BNPL is typically 1.5% to 3% of the invoice value, similar to credit card processing fees. For most distributors, the combination of increased sales, eliminated credit risk, and reduced administrative burden more than covers that cost.
The competitive advantage is especially strong for regional distributors competing against larger national players. National chains often have the resources to offer generous payment terms because they can absorb bad debt across a large portfolio. A regional distributor cannot afford that luxury. B2B BNPL levels the playing field on supply chain payments by giving you access to the same credit infrastructure without the corporate overhead. If you can offer the same (or better) payment terms as a national chain, price and proximity become the deciding factors. Regional distributors almost always win on proximity and relationship.
Cross-Border Payments Are Getting Dramatically Cheaper
Any distributor sourcing steel, fittings, or equipment internationally knows the pain of cross-border payments. Traditional bank wires cost 2% to 7% in total when you add fees, foreign exchange spreads, and intermediary charges. On a $500,000 steel shipment from a Chinese mill, that is $10,000 to $35,000 in transaction costs alone. Those costs are invisible to most business owners because they are buried in the exchange rate spread rather than listed as a separate line item on the bank statement.
Fintech alternatives have slashed the cost of international transfers to 0.5% to 2%. Wise processed $185.2 billion in cross-border volume in FY2025, using the mid-market exchange rate with transparent fees that show you exactly what you are paying. Airwallex serves 150,000-plus businesses globally with multi-currency accounts in over 60 countries, where roughly 90% of transfers arrive same-day. Both platforms have transformed what used to be a slow, expensive, and opaque process into something that takes minutes and costs a fraction of traditional banking channels.
One documented case showed savings of $36,000 per year simply by switching from PayPal to Airwallex and Wise. For a regional distributor with regular international purchasing, the savings compound quickly and can represent the difference between a profitable year and a break-even one. A distributor spending $3 million annually on imported products could save $60,000 to $120,000 per year by switching to fintech payment rails. That is money that flows straight to the bottom line.
The broader impact on international purchasing is that cheaper cross-border transfers open up new sourcing options. When it costs $35,000 to pay a Chinese mill, you are locked into a narrow set of established suppliers because you cannot afford to test new relationships. When it costs $5,000, you can trial new suppliers, negotiate harder on price, diversify your sourcing risk, and respond faster to market opportunities. Reducing the cost of international supply chain payments does not just save money on existing transactions; it changes the strategic calculus of how you source products entirely.
FX Hedging and Multi-Currency Accounts Protect Your Margins
Both Wise and Airwallex offer forward contracts for FX hedging. When you lock in a price on a large shipment weeks before payment is due, a forward contract protects against adverse currency movements. This is not exotic finance reserved for multinational corporations. It is basic risk management that every distributor handling international purchasing should be using.
Consider a practical example. You agree to buy 200 tonnes of structural steel from a Korean mill at a price quoted in USD. Payment is due in 45 days. During those 45 days, the AUD drops 3% against the USD. On a $400,000 purchase, that 3% movement costs you an additional $12,000. A forward contract would have locked in the exchange rate at the time you placed the order, eliminating that risk entirely. The cost of the forward contract is typically 0.1% to 0.5% of the transaction value, which is a fraction of the potential loss from an adverse currency move.
Multi-currency accounts let you hold CNY, INR, KRW, or USD locally and time conversions for the best rate. Instead of converting AUD to USD to CNY through your bank (losing margin at each conversion), you hold CNY directly and pay suppliers in their local currency. Some distributors report that simply holding supplier currencies and timing conversions around favourable rate movements saves an additional 1% to 2% on international purchases.
The practical benefit goes beyond cost savings. Multi-currency accounts give you visibility into your true international exposure. When you can see exactly how much you hold in each currency and what your upcoming obligations look like, you make better purchasing decisions. You might accelerate a purchase when the AUD is strong, or delay a non-urgent order when the rate is unfavourable. That kind of informed decision-making around international supply chain payments was previously available only to businesses with dedicated treasury functions. Fintech platforms have made it accessible to any distributor with a laptop and an internet connection.
AI Is Automating the Financial Back Office
Reconciling hundreds of invoices, tracking payment terms across dozens of customers, and forecasting cash across cyclical demand patterns eats time that distribution business owners do not have. The financial back office in most distribution businesses is a patchwork of spreadsheets, accounting software, and manual processes that barely hold together during busy periods. When things get hectic during peak construction season, invoicing falls behind, reconciliation gets sloppy, and cash flow surprises become inevitable.
Xero’s AI agent JAX now handles bank reconciliation, invoicing, payment reminders, and cash flow projections, with 73% of Xero customers already using these features. QuickBooks has launched comparable AI-powered accounting tools. Both platforms cost a fraction of hiring additional finance staff and operate around the clock without taking leave or making data entry errors.
The impact on how a business manages its supply chain payments is indirect but significant. When your back office runs efficiently, you catch discrepancies faster, you pay suppliers on time (preserving early payment discounts), and you chase overdue receivables before they become bad debts. A distributor who identifies and disputes an incorrect invoice within 24 hours is in a far stronger position than one who discovers the error 60 days later during a manual reconciliation process.
Automation does not replace your finance team. It gives them leverage to manage more volume without more headcount, which is especially critical when the volume and complexity of supply chain payments grows during peak periods. For distribution businesses running on thin margins (typically 3% to 8% net margin for steel distribution), the efficiency gains from AI-powered reconciliation and invoicing can improve net profit by 1% to 3% of revenue. On a $20 million business, that is $200,000 to $600,000 in additional profit from operational improvement alone. That number is not speculative. It reflects documented outcomes from businesses that have transitioned from manual processes to automated platforms.
Cash Flow Forecasting for Cyclical Distribution Businesses
Dedicated cash flow forecasting is particularly valuable for distributors facing cyclical demand. Construction activity in Australia peaks during spring and summer, drops during winter, and follows project cycles that can create feast-or-famine cash flow patterns. A distributor might have $800,000 in receivables during October and $300,000 in February, but their supplier obligations remain relatively constant. Without accurate forecasting, that seasonal swing creates cash crunches that force emergency borrowing at unfavourable rates.
AI-driven demand forecasting can anticipate seasonal swings and optimise purchasing timing. Tools like Agicap connect inventory budgets to company-level cash flow, helping distributors see their true cash position across multiple product lines and customer segments in real time. Rather than relying on a monthly report that is already outdated by the time it is reviewed, these tools provide a rolling forecast that updates daily based on incoming payments, outgoing obligations, and pipeline data.
The connection to supply chain payments is direct. Better forecasting means you know when cash will be tight and can arrange financing in advance rather than scrambling when a supplier demands payment. You can time large international purchases to coincide with strong cash periods. You can offer customers longer terms during slow months to win work without putting your own cash position at risk. You can negotiate early payment discounts with suppliers when you know you will have surplus cash, and lock in financing for periods when you know you will be stretched.
The best forecasting tools learn from your historical patterns and improve over time. After 12 months of data, an AI-powered forecasting tool can predict your weekly cash position with 85% to 95% accuracy. That level of confidence allows you to make purchasing and pricing decisions based on data rather than gut feel. For a distribution business where a single large order can shift cash flow by hundreds of thousands of dollars, accurate forecasting is not a luxury. It is a core operational requirement that separates businesses that grow confidently from those that lurch from one cash crisis to the next, never quite sure whether they can afford the next big order.
Embedded Finance Is Coming to Distribution ERPs
The next frontier for supply chain payments in distribution is embedded finance, where financial services are built directly into the software you already use to run your business. Rather than juggling multiple platforms (your bank, your accounting software, a separate financing platform, and an FX provider), embedded finance brings everything into a single workflow that eliminates friction from the payment process.
Instead of logging into your bank, then your accounting software, then a separate financing platform, imagine your ERP or inventory management system offering financing options at the point of purchase order. You create a PO for $200,000 in structural steel. Your system automatically checks available financing, presents options (pay now for a 2% discount, use reverse factoring for 7-day settlement, or finance over 90 days at 4.5% APR), and executes the transaction in one step. No separate logins. No re-entering data. No waiting for approvals from a platform that does not talk to your other systems.
This is not theoretical. Companies like Stripe Treasury, Unit, and Bond are building the API infrastructure that lets any software platform embed banking, lending, and payment services. Distribution-specific ERP providers are starting to integrate these capabilities, recognising that their customers want financial tools inside the software they already use rather than bolted on as an afterthought.
For distributors, embedded finance means the complexity of managing finances gets absorbed into the tools you already use. The same trend is reshaping how contractors handle project financing, with fintech capabilities moving closer to the point of transaction rather than sitting in separate banking relationships. The goal is a world where financial decisions happen seamlessly at the moment they are needed, not as a separate administrative task hours or days later.
The timeline for widespread adoption is two to five years. Early adopters among distribution ERP vendors are already offering basic embedded payment and lending features. Full integration of lending, insurance, and FX capabilities will take longer but is inevitable given the clear demand from mid-market businesses that are tired of managing a patchwork of disconnected financial tools and manual workarounds.
Real-Time Payment Rails Are Changing Settlement Speed
Australia’s New Payments Platform (NPP) and similar real-time payment systems globally are changing the speed at which B2B transactions settle. Traditional bank transfers between businesses take one to three business days. Real-time rails settle in seconds. That difference might sound trivial, but across hundreds of transactions per month, the cumulative impact on working capital is substantial.
Consider the math. If your average daily receivables are $50,000 and you shorten settlement by two days across your customer base, you free up $100,000 in working capital permanently. That is $100,000 you no longer need to borrow, no longer need to finance, and no longer need to worry about during tight cash periods. Multiply that effect across a full year and the financial benefit is meaningful for any mid-market distributor. For businesses that currently rely on an overdraft to manage timing gaps between inflows and outflows, faster settlement can reduce or eliminate the need for that facility entirely, saving thousands per year in interest and fees.
Real-time payments also enable new business models for supply chain payments. Some distributors are experimenting with pay-on-delivery models where the driver collects payment via a mobile terminal that settles instantly. This eliminates invoicing entirely for smaller transactions, reducing administrative overhead and eliminating credit risk. For cash-and-carry customers or small project orders under $5,000, pay-on-delivery with instant settlement can replace the traditional cycle of order, invoice, remind, collect, reconcile. That is five steps reduced to one. The administrative savings alone can justify the investment in mobile payment terminals for delivery vehicles.
The infrastructure is mature enough in Australia that there is no technical barrier to adoption. The bigger challenge is that B2B payment processing habits are slow to change, and many businesses still default to 30-day terms and bank transfers because that is what they have always done. The distributors who actively encourage customers to use real-time payment methods (by offering small discounts for instant settlement, for example) will see the working capital benefits sooner than those who wait for the market to shift on its own.
What This Means for Supplier Relationships
Better financial management does not just improve your cash flow. It strengthens your supplier relationships in ways that create lasting competitive advantage for regional distributors. The way you handle payments to your suppliers sends a signal to every partner in your network about how seriously you take the relationship and how reliable you are as a business partner.
When you pay suppliers faster (through reverse factoring or simply by freeing up working capital through the tools discussed above), you become a preferred customer. Preferred customers get priority allocation during shortages, better pricing, advance notice on price increases, and more flexible terms during tough periods. In the steel industry, where global supply disruptions can create months-long shortages overnight, being a preferred customer is worth more than almost any other competitive advantage.
For a regional steel distributor, supplier relationships are everything. When supply is tight and every distributor is calling the same mills, the ones who pay reliably and quickly get their orders filled first. Fintech tools that accelerate your supply chain payments give you that reliability without requiring you to tie up your own cash for weeks or months. You get the reputation of a fast payer while maintaining healthy cash reserves. During the steel supply disruptions of 2021 and 2022, distributors with strong supplier relationships and fast payment capabilities were able to secure stock that their competitors simply could not access. The businesses that had invested in payment efficiency before the crisis were the ones that came through it strongest.
The relationship benefit compounds over time. A supplier who knows you will pay within 7 days (because a fintech platform guarantees it) will prioritise your orders over a competitor who pays in 60 days. That priority translates into better fill rates, faster delivery, and ultimately better service for your own customers. In a market where delivery speed is often the deciding factor for construction customers choosing between distributors, the upstream relationship advantage creates a downstream competitive edge that is difficult for competitors to replicate. You are not just buying steel. You are buying reliability, priority access, and first-mover advantage on new product lines, all funded by the working capital efficiency that modern financial tools provide.
Where to Start
Three moves deliver the fastest return for distributors looking to improve their supply chain payments and overall financial operations.
First, evaluate whether reverse factoring or B2B BNPL can shift receivables risk off your balance sheet. Both tools free up working capital and reduce the time your finance team spends on credit management. Start with your largest customer accounts where the impact is greatest. A single large construction company customer moving to a reverse factoring programme can free up hundreds of thousands of dollars in working capital within the first month. Even if you start with just your top five accounts, the improvement in cash flow will be noticeable within the first quarter.
Second, compare your current international payment costs against Wise or Airwallex. The savings on even a handful of shipments will likely justify the switch. Request a fee comparison from both platforms using your last six months of international transfers as a benchmark. Most distributors are shocked to discover how much they have been paying in hidden FX spreads through their traditional bank. One simple test: ask your bank what exchange rate they applied to your last international transfer and compare it to the mid-market rate on Google or XE.com at the same date and time. The difference is what you have been paying in invisible fees.
Third, trial AI-powered reconciliation through your existing accounting platform before investing in standalone tools. If you are on Xero or QuickBooks, the AI features are already included in your subscription. Turn them on and measure the time savings over a 90-day period. If your finance team is spending more than 10 hours per week on manual reconciliation and invoice processing, the return on switching to automated workflows will be immediate and measurable. Track the reduction in data entry errors as well, because those errors cascade through your financial reporting and often cause problems months down the line when they surface during BAS preparation or end-of-year accounts.
Beyond these initial steps, start thinking about how embedded finance and real-time payments will change your operations over the next two to three years. The invoice processing challenges that plague B2B businesses are being solved by fintech providers who understand that distribution businesses need practical tools, not complex financial engineering designed for Fortune 500 treasury departments.
The Distribution Industry Is at a Turning Point
The distribution sector has operated on handshake credit terms and manual invoicing for decades. Fintech is replacing those processes with faster, cheaper, and more transparent alternatives that fundamentally change how businesses manage money across their supply chains.
Regional distributors that adopt early will free up working capital, reduce credit risk, and compete more effectively against larger national players. The tools described in this article are not future possibilities. They are available now, priced for mid-market businesses, and proven across thousands of distribution companies globally. Every category covered here, from reverse factoring and B2B BNPL to AI-powered reconciliation and real-time settlement, represents a concrete opportunity to reduce cost or increase revenue within the next 12 months.
The window of competitive advantage from modernising supply chain payments is open but will not stay open forever. As more distributors adopt these tools, the early movers will have established supplier relationships, operational efficiencies, and cash flow advantages that latecomers will struggle to replicate. The businesses that act now will set the benchmark that their competitors will spend years trying to catch up to.
The question is not whether fintech will transform distribution. It already is. The question is whether your business will be leading that transformation or reacting to it. For regional distributors who have built their businesses on relationships, local knowledge, and service quality, fintech is not a threat. It is a multiplier that lets you do what you already do well, but faster, cheaper, and at a scale that was previously out of reach.