Author Archives: David Gustin

Should Middle Market Companies Consider Supply Chain Finance?

- December 18, 2014 2:12 PM | Categories: Guest Post, Supply Chain, Trade Financing

Approved trade payable finance/reverse factoring programs – otherwise known as supply chain finance – have been the domain of the investment-grade or near-investment corporations. But as many bankers compete on price for these programs and the market becomes saturated with solutions (i.e., most big credit quality companies have probably heard 10 or more bank pitches), the question becomes what about the middle market? Can programs work with this segment? Check out this article at our sister site, Trade Financing Matters.

more ▸
 

2015: A “Banner Year” for Invoice Discounting

- October 22, 2014 2:13 AM | Categories: Analysis, Invoicing

Invoice discounting is about to hit the afterburner with significant program acceleration inside existing accounts as well as new program implementation and adoption in 2015. In the second installment of this two-part Spend Matters PRO research brief, Jason Busch, founder and managing director, Pierre Mitchell, chief research officer and managing director along with David Gustin, managing director of Trade Financing Matters, explore 10 reasons for this growth. Part 1 of this series included reasons 1-5. In Part 2, we cover reasons 6-10.

more ▸
 

10 Reasons Why 2015 Will be the Year Invoice Discounting Growth Hits an Inflection Point (Part 1)

- October 20, 2014 6:28 AM | Categories: Analysis, Invoicing, P2P

There. We’ve put a date on it. 2015 will be the year invoice discounting growth hits a true inflection point with many procurement and A/P organizations finally moving away from poorly managed static payment terms. What type of growth are we talking about? At Spend Matters, we would argue that from a relative dollar standpoint (i.e., discounts captured based on dollars advanced early to suppliers), we will see in excess of 25% growth from programs in 2015 within the Global 2000. There are many elements coming together to create what we view will be a banner year in 2015 for invoice discounting. In this two-part Spend Matters PRO research brief, Founder and Managing Director Jason Busch, Chief Research Officer and Managing Director Pierre Mitchell along with Managing Director of Trade Financing Matters David Gustin explore 10 of them.

more ▸
 

Basware and Arrowgrass Go After Non-Confirmed Invoice Market

- October 14, 2014 1:29 PM | Categories: Guest Post

Spend Matters welcomes this article originally published on our sister site Trade Financing Matters. Basware recently announced its financial offering, a suite of supply chain finance capabilities that are both buyer and seller driven. One is called Basware Factor, and the company is partnering with Arrowgrass Capital Partners, a $5 billion London hedge fund, to develop an electronic invoicing service in the latest move to capture business credit that has stayed on corporates balance sheets in the form of payment terms.

more ▸
 

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.

more ▸
 

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.

more ▸
 

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.

more ▸
 

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.

more ▸
 

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."

more ▸
 

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).

more ▸
 

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.

more ▸
 

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.

more ▸