Core Concept - The prepayment financing model in supply chain finance effectively transforms the credit of core enterprises into financing capabilities for downstream SMEs, addressing funding bottlenecks in the procurement phase and promoting a healthy supply chain ecosystem [1][2]. Summary by Sections What is Prepayment Financing in Supply Chain Finance - Prepayment financing is a crucial model where core enterprises with strong credit sign procurement contracts with suppliers. When suppliers lack funds to initiate production, they can leverage the core enterprise's credit to apply for prepayment from financial institutions, which ensures the completion of orders and forms a closed funding loop [2]. Operational Process of Prepayment Financing - The model resolves funding bottlenecks for suppliers during procurement and ensures the proper use of funds through the involvement of financial institutions [3]. Differences and Connections with Other Financing Models - Prepayment financing, accounts receivable financing, and inventory financing are all essential models in supply chain finance, relying on core enterprise credit to integrate logistics, information flow, and capital flow. They can complement each other based on different operational stages and funding needs [5][6]. Advantages of Prepayment Financing - This model helps downstream SMEs with limited capital but stable orders to expand operations, supports growing businesses with strong relationships with core enterprises, and alleviates financial pressure for companies with long procurement cycles [8]. Suitable Enterprises for Prepayment Financing - It is particularly suitable for SMEs with stable orders but limited funds, growing companies with good relationships with core enterprises, and businesses facing long procurement cycles but with promising sales prospects [8]. Credit Risks and Benefits - The model mitigates funding shortages for downstream enterprises, allowing timely procurement of quality products, while core enterprises benefit from early cash flow and enhanced cooperation with suppliers. Financial institutions gain stable interest income with manageable risks [9].