Next week, my fearless colleague David Gustin, managing director of Trade Financing Matters, is headed to the White House to present at a SupplierPay meeting. He’ll be joined by a group of procurement and finance executives that have bought into the president’s request (not mandate) to get cash moving through the supply chain more efficiently and into the hands of smaller businesses.
David is no stranger to early payment and trade financing programs. He’s studied them for years under the guise of what many of us who have been around the payments block know them as historically – factoring, approved trade payables financing, distributor financing, card programs, invoice discounting, etc.
But the landscape that enables these programs has radically shifted in recent years (one could really argue recent quarters). For example, the increasing adoption of e-invoicing programs is speeding up approval cycle times and providing greater assurance to participants in a financing scheme (if third parties are involved) that an approved invoice is truly approved – legitimately and net of dilutions.
Moreover, new business models (e.g., auctions and bid/ask markets) are beginning to emerge that act as clearinghouses between supplier capital needs/requirements and excess cash within treasury groups (or cash that can be put to better use in early payment rather than through other short-term investment vehicles).
In short, the time is ideal for early payment programs to provide benefits to both buyers and suppliers as standard practice. And government moral suasion (e.g., SupplierPay) is a great way to bring attention to the issue. But the question remains: without teeth, will the program have any bite?
I’m honestly not so sure if that question is even relevant in today’s climate – I believe the invisible payments hand will win the day anyway. Perhaps with a little push from an administration that cares about the issue. And my fearless colleague – and least to some degree!
I’ll share some of the highlights of his presentation in the coming week as well for those not attending next week’s events in person. And do drop David a line (dgustin (at) tradefinancingmatters (dot) com) if you’d like to learn more about the SupplierPay initiative and who to work with on it.