The intersection of the physical and financial supply chain worlds is quickly approaching. In fact, I wager 2014 will be a breakout year of greater intersections and linkages around payment and working capital with eProcurement and e-invoicing programs, for the first time involving material coordination between procurement, accounts payable, treasury, and supply chain groups. For further context and perspective on the topic, see the first installment in this series: Integrating the Physical and Financial and Financial Supply Chain: Lessons From “The Wire.”
Even though large banks may appear to be pulling back from activity in the area in the US (e.g., J.P. Morgan Chase shutting down the Xign business unit), we have no doubt that others will emerge to pick up the slack. Starting first with OB10/Tungsten in the UK (which appears to present a friendlier regulatory climate for receivables financing) and also considering UK upstarts such as Oxygen Finance, Cross Flow Payments, and Invapay, the Brits are certainly among the leaders in the supply chain and receivables financing charge.
In addition, other providers to watch include Taulia. They approach discounting and receivables financing from a software enablement angle, starting first with e-invoicing through to providing tight A/P and treasury integration in ERP system environments. This is true especially with SAP, in which Taulia has established a beachhead over competitors in driving large scale discounting adoption within early adopters in the Fortune 500. Moreover, Basware / Mastercard, Ariba / Discover, and Tradeshift / CapitalAid have all announced their intentions to collectively pursue, through partnerships, the opportunity to more closely link the worlds of P2P and financial supply chains.
Add to this significant banking, hedge, and PE fund interest in the sector (which we’re seeing on both sides of the Atlantic), and it would seem 2014 will be the year that receivables financing integrated tightly with P2P takes off. But for things to truly reach the tipping point, it will be necessary to ensure adequate financing liquidity (which has been lacking to date), combined with technology solutions that enable the long-tail of suppliers to take advantage of receivables financing “early and often,” as one expert put it to us.
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