In his recent white paper, “On-Demand, Event Triggered Finance With Network Models – A Game Changer?,” my colleague David Gustin offers a number of advanced scenarios and observations that could change the world of receivables and payables financing for good – and for the better. These ideas rely on putting in place new types of B2B infrastructure between companies – no easy feat, mind you! But the possibilities are endless.
Consider, as David notes, how “an advanced B2B platform might predict that degrading supplier on-time delivery (or quality) performance – combined with the supplier’s willingness to take aggressive early payment discounts – might signal a problem. The buyer could then assist the supplier and gain preferential supply allocations and pricing. Or the buyer could also identify alternate supply sources to hedge against supplier failure.”
As David concludes, “The increasing integration and synergy between supply chain information systems to the physical supply chain (i.e., ‘internet of things’) and the financial supply chain will also be increasingly enabled not just by one-to-one buyer-supplier automation, but also through next-generation B2B networks.”
But networks must go beyond the basics – and beyond invoice discounting alone. These new capabilities, he suggests, will not just be based on basic document exchange and indirect spending, but rather a “many-to-many” (i.e., multiple buying organizations, multiple suppliers) approach that can also support the needs of not just buyers and sellers, but also supply chain lenders and logistics providers who are ‘prosumers’ (i.e., consumers and producers) of this B2B network data.”
It’s a fascinating end-state. And it’s our bet we’ll achieve sooner rather than later given that the technology is available today to make it happen.
To learn more about the intersection of business and supplier networks and trade financing, you can download David’s recent full report here. We also encourage you to investigate our deep, subscription coverage of trade financing, invoicing discount and P2P on Spend Matters PRO.
In addition to Spend Matters PRO research, David and Jason offer workshops, lectures and advisory services to corporations, banks, private funds, consultancies and technology providers that want to learn more about the trade financing ecosystem and its intersections with new technology products and platforms. Contact them directly to learn more: jbusch (at) spendmatters (dot) com or dgustin (at) tradefinancingmatters (dot) com.