There is a conversation that happens in procurement and finance teams at large Kenyan companies — often quietly, and usually when something has already gone wrong.
A key supplier misses a delivery. Or they deliver short. Or they call to say they cannot fulfill the order this month because they are “waiting on payment from another client.”
The instinct is to treat this as a supplier reliability problem. To find a backup. To escalate. But in our experience working with manufacturers, distributors, and large corporates across Kenya, the actual root cause is almost always simpler: your supplier ran out of cash.
Not because they are a bad business. Because they are a small one.
The Hidden Supply Chain Risk Nobody Puts in Their Risk Register
Here is how the cycle typically works. You issue a purchase order to a supplier. They need to buy raw materials, stock, or inputs to fulfill it — but they need that capital now, before they have been paid. So they go looking for financing.
If they cannot get it, they either delay your order, deliver partially, or quietly start prioritising other clients whose payment terms are less punishing. Your supply chain reliability is now a function of your supplier’s working capital position — something you probably do not track and have no visibility over.
Large companies spend significant resources on supplier qualification: financial checks, compliance audits, quality certifications. But very few put in place any mechanism to actually support the financial health of their approved supplier base. Which is a bit like vetting someone’s swimming ability and then refusing to put a lifeguard at the pool.
The Anchor Advantage — and Why It Is Underused
Here is the structural reality: as a large, creditworthy corporate, you have something your SME suppliers do not — a balance sheet and a payment track record that a financier can actually work with.
In structured supply chain financing, that creditworthiness is not just your asset. It can be extended — deliberately and safely — to underpin financing for your supplier network. The mechanics work like this:
DCL establishes a facility anchored on your receivables and payment commitments. Your approved suppliers access working capital against the security of your undertaking to pay them. The goods move through a controlled arrangement. Payment flows through a dedicated collection account. Your supplier gets funded, fulfills the order, and DCL is repaid when you settle.
You get reliable delivery. Your supplier gets the working capital they need. And the financing is structured so that your own cash flow and balance sheet are not burdened in the process.
Three Scenarios Where We See This Work Especially Well
- Manufacturers with distributor networks. If you manufacture and distribute through stockists or regional distributors, their ability to carry inventory is directly tied to their access to credit. A distributor financing arrangement — where DCL funds their inventory purchases from you — means they can stock more, sell more, and remit faster. Your cash conversion cycle accelerates. Their business grows. It is a genuine win on both sides.
- Companies with SME vendor supply chains. If a significant portion of your inputs come from smaller vendors, the same logic applies. An anchor-backed vendor facility means your approved vendors can access financing on the strength of your name — without you guaranteeing their loans or appearing on any credit instrument. DCL manages the risk, the collateral, and the disbursement. You provide the purchase order and the escrow.
- Sector associations and membership bodies. If your industry has a membership institution — say, a manufacturers’ association — the association’s records, integrity framework, and sectoral data can be used to structure financing across member firms’ supply chains. This brings structured finance to corners of the market that typically cannot access it at all.
The Bank Conflict Problem — And How to Work Around It
One scenario we encounter more than you might expect: a bank that wants to provide working capital to its own vendors — the businesses that supply it with services, equipment, or goods — but cannot do so directly without running into regulatory restrictions or conflict-of-interest issues.
DCL operates as the originating, servicing, and risk-managing agent in these cases. The bank provides the balance sheet capacity. DCL handles the structuring, the collateral management, and the ongoing servicing. The vendors get funded. The bank stays compliant. Everyone moves forward.
It is less exotic than it sounds — it is simply a recognition that some financing needs require a purpose-built intermediary rather than a direct lend.
What This Is Not
This is not a guarantee arrangement where you are on the hook for your suppliers’ debts. It is not a loan from you to them. It is not a balance sheet commitment on your part.
The structure is designed so that DCL maintains control of the financed goods and the payment flow. Your role is to be a reliable anchor — to have confirmed orders with approved suppliers, and to pay through a designated account when goods are delivered and accepted. The risk management sits with DCL, not with you.
The Business Case in Plain Terms
A stable, well-financed supplier base means fewer delivery failures, fewer last-minute substitutions, and fewer emergency procurement decisions. It means your production lines keep moving, your retail shelves stay stocked, and your logistics run on schedule.
The cost of a supplier financing arrangement is typically a fraction of what disrupted supply chains cost in lost production, emergency procurement premiums, or reputational damage with end customers.
We always say it this way to clients: you have already approved these suppliers. You trust them enough to buy from them. The only question is whether you want them to be in a position to actually deliver.
Let’s Build Something
If you run a large operation with an SME supplier or distributor network, we would be glad to walk you through what a structured supply chain finance arrangement could look like for your specific situation — which suppliers it would cover, how the payment mechanics would work, and what it would take to get it off the ground.
Reach out to our team here and we will take it from there.
