Author Archives: David Gustin

For Investors, ICC’s 2014 Trade Register Report Lacks Credibility

- July 1, 2014 4:20 PM | Categories: Trade Financing

I know I won’t be popular with this post, but I never choose the popularity route. To me, I’ll take quality over quantity any day. And so I have to point out that I think the 2014 International Chamber of Commerce (ICC) Trade Register Report has a ways to go. The report concluded trade transactions for all intent and purposes have practically zero losses. That’s right -- zero losses. The problem is that the people who matter don’t believe it. Who matters? Well, investors matter. And if investors don’t find your data credible just because the banks say so, then they will buy something else.

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The State of Supply Chain Finance Programs: Seven Quick Facts

- June 2, 2014 4:48 PM | Categories: Supplier Management, Trade Financing

I recently had a few discussions with corporates who have rolled out Supply Chain Finance (or Approved Trade Payable) programs with their supplier base. These corporates have been running programs for several years so I thought it would be good to get some feedback on how the programs are progressing. Here are seven quick facts that seem to be consistent with programs.

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Banks and Supply Chain Finance Technology Deployment

- May 27, 2014 4:36 PM | Categories: Supply Chain, Trade Financing

Many banks are trying to figure out how to provide supply chain finance capabilities to their clients and what technologies they need to support their infrastructure. Trade is now becoming just another specialized lending product at banks, and leading banks are trying to figure out how to integrate trade finance with their factoring, commercial finance, asset based lending, invoice discounting and other bank lending areas.

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Why Procurement, Treasury, and Finance Need to Be a Team (Especially Today)

The old way of doing things, with procurement, treasury, and finance acting in silos, no longer makes sense. This post gives some of the basics of why procurement needs to start paying attention to supply chain finance, but if you want deep analysis, join me tomorrow from 12-1 pm Central on a webinar called Supply Chain Finance: Where Are Leading Corporates Going? But first, the basics.

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Breaking Down the Accounting behind Receivables

- May 19, 2014 3:34 PM | Categories: Commentary, Trade Financing

Since the Enron and WorldCom crisis when independent auditor Arthur Anderson failed to report illegal accounting practices, the SEC has been monitoring public corporations more closely. Thus, we all should have some basic knowledge of accounting, especially as the interest in financing trade receivables by third parties is as high as ever. More than ever Receivables are being used to raise cash. When you think of a sale, it’s pretty simple: Debit “accounts receivable” and credit “credit sale."

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Do Suppliers Push Back on Dynamic Discounting and P-Card Programs?

- May 15, 2014 4:05 PM | Categories: Procurement Commentary, Trade Financing

Do you see suppliers fighting back by raising prices when buyers use dynamic discounting or p-cards to settle more traditional supply chain spend? I hear that comment from Procurement officers sometimes, but there really is no data anywhere that I can find. Both dynamic discounting and p-card programs charge high annualized percentage rates. In the case of p-cards, the business model of interchange must support both the merchant and issuing card member bank. In dynamic discounting, it's a risk free return for treasury. These high rates beg the question regarding when suppliers will just swallow the interchange in order to keep the customer and when they will push back (including refusing to accept a p-card in the first place).

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An Update on Crossflow Payments: Trade Financing and Free EDI/invoice Connectivity Rocketing Up

Crossflow Payments offers financing that is integrally coupled with free supplier network/EDI replacement capabilities as the two central components of the value proposition. From a marketing perspective, the firm appeared to be relatively quiet since launch, but they’ve more than made up for it in commercial traction to date. The genius of the approach is that the team has taken many years of experience from the world of EDI for all spend areas (e.g., direct and indirect) and combined it with an in-depth understanding of broader trade financing, including cross border transactions. So far 20 UK companies have taken Crossflow up on the offer of a free EDI replacement for supplier connectivity. The company typically signs three-year agreements for free EDI transaction processing (integrated to a commitment to offer the Crossflow finance solution to suppliers). Crossflow’s revenue is driven by its free connectivity, a competitive transactional connectivity offering – and of course the uptake by suppliers of finance. We’re very enthusiastic about Crossflow’s prospects in the market – in the UK and beyond. Spend Matters PRO members can read why in the full text of our analysis.

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Tungsten’s Three-Headed Funding Model Eliminates Hassle for Suppliers of Large Corporations

- April 14, 2014 3:03 PM | Categories: Supplier Management, Trade Financing

Tungsten was set up pure and simple to use technology to change and shape the way suppliers of large corporations access financing. Their slogan is a “Secure, Smart, Fast” solution for suppliers to get early payment. By the summer, Tungsten expects to have the financing capability in a fully compliant and regulated way across Europe and the U.S. The goal and journey is to build out globally. David Gustin recently spoke with Tungsten's Phil Ashdown. Phil has a deep background in lending and finance. Between 1998 and 2006 he built and ran a leverage finance business and then set up a distressed credit business at a hedge fund based in London and New York. Read on for the interview, as well as our recommendations to those considering supplier networks with financing.

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The Holy Trinity that Makes Traxpay Connect Networks with Payments

- April 8, 2014 10:45 AM | Categories: Procurement, supplier networks, Suppliers

OLYMPUS DIGITAL CAMERA In this research brief, Jason Busch and David Gustin (Managing Director of Trade Financing Matters) explore why a unique need for payment capability fully integrated into the B2B sector is long overdue. Our research suggests a strong need exists to be able to bring all disparate players together, add a real-time payment capability, and have it all make sense for buyers and suppliers in the supply chain. This is where Traxpay comes in by enabling structured (e.g., invoice, purchase order) and unstructured data (e.g., photos, pdfs, etc.) to travel between buyers and sellers to make and reconcile payments in a dynamic fashion. They bring a core banking system (funds sit with the German Bundesbank), a secure B2B transaction model and platform-as-a-service (PaaS) approach to the payments space. [CORRECTION: AN EARLIER VERSION OF THIS SUMMARY LISTED THE AUTHORS INCORRECTLY. DAVID GUSTIN AND JASON BUSCH ARE THE AUTHORS OF THIS BRIEF].

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JPMorgan Chase to Shut Down Xign

- September 26, 2013 4:10 PM | Categories: Breaking News

Work space JPMorgan Chase will be shutting down its Xign business unit. Chase acquired Xign in 2007 but struggled to add new customers to the early payment discounting service. Part of the vision in acquiring Xign at that time centered not just on facilitating early payment discounting capability through a software platform, but also aligning this solution with settlement, payment, and a broad network of suppliers – offering Chase a wide set of capabilities to up-sell and cross-sell across the range of treasury and related corporate banking services.

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