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Module: General Practice

Q172: Regarding "Supply Chain Finance" (SCF), identify the INCORRECT statement:

A
It typically involves an "Anchor" (usually a large corporate) and "Spokes" (SME suppliers/dealers).
B
The "Anchor's" strong credit rating is leveraged to provide lower-cost financing to the "Spokes."
C
In a "Dealer Finance" model, the bank finances the Corporate Anchor to manufacture goods for the SME dealers.
D
In a "Vendor Finance" (Reverse Factoring) model, the bank pays the SME supplier early based on the Anchor's acceptance of the invoice.
✅ Correct Answer: C
In Dealer Finance, the bank finances the SME Dealer (Spoke) to purchase inventory from the Anchor.
The money flows from the Bank to the Anchor (on behalf of the Dealer). It is not financing the Anchor's manufacturing; it is financing the Dealer's procurement.
The core logic of SCF is arbitrage—using the Anchor's AAA rating to give the SME (Spoke) a rate better than it could get on its own.
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