Category Archives: Trade Financing

Beyond Approved Invoices: Using a PO to Trigger Financing

- January 22, 2015 10:03 AM | Categories: Analysis, Finance, Invoicing, Trade Financing

1350658030t6lus While invoice discounting is getting nearly all of the attention today at the intersection of P2P, business networks, supplier networks and trade financing, might a purchase order (PO) actually be a better event trigger? The answer, if you can mitigate risk, is: absolutely. Financing off a PO allows, in theory, a significantly greater term over which to finance (and gets cash into the hands of suppliers more quickly).

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Everything You Thought You Knew About Taulia and Tungsten is Wrong

Screen Shot 2015-01-15 at 4.05.36 PM A bunch of folks on the Spend Matters analyst team have collectively spent thousands of hours in the past year digging into the intersection of receivables financing, payables financing and purchase-to-pay (P2P). We’ve explored vendors from all sides, including Taulia and Tungsten. Read on to hear the "myths" and the reality behind these two companies.

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Beyond Invoice Discounting and Dynamic Discounting Alone: 6 Triggers for Receivables and Payables Financing

- January 15, 2015 6:42 AM | Categories: Analysis, Learning / Research, Trade Financing

I sometimes tell people that we’re in the top half of the first inning, with the lead-off hitter on plate, to describe where we are in the evolution of purchase-to-pay (P2P), supplier networks, business networks and trade financing. And the first pitch we’ve tossed to the plate is the approved invoice (net of dilutions) as the trigger for online-driven financing. This is the premise behind financing-centric network and e-invoicing providers like Tungsten and Taulia. But e-invoicing is only a single trigger...

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EDI Failures: Why Advanced Ship Notifications Are Limiting Trade Finance

- January 14, 2015 6:28 AM | Categories: Trade Financing

Electronic Data Interchange (EDI) remains the lifeblood of corporate supply chain data flows today. Indirect business networks and e-invoicing networks, such as the kind proffered by Ariba, Basware, Tungsten and others, are tiny by comparison in terms of documents and dollars changing hands. Yet EDI isn’t perfect. Advanced ship notifications (ASNs) is one area where EDI still comes up short, especially as a system of record and trigger for trade finance. In his recent white paper, “On-Demand, Event Triggered Finance With Network Models – A Game Changer?,” my colleague David Gustin provides a number of reasons why the ASN has not become a reliable trigger for financing, especially compared with approved invoices.

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Why Are Financial Supply Chains Not Keeping Up With Physical Supply Chains?

- January 13, 2015 6:18 AM | Categories: Finance, Supply Chain, Trade Financing

file00088836384 Financial supply chains and global capital flows are highly complicated. So, too, are physical supply chains. Yet the way cash flows around the globe is actually quite antiquated compared to the flow of goods and materials (and the information trail that can enable better procurement and supply chain management compared with trade financing). In the white paper, “On-Demand, Event Triggered Finance With Network Models – A Game Changer?,” my colleague David Gustin captures this idea when he notes that, “In many industries, the financial supply chain has lagged behind the advances made by the physical supply chain by a decade.”

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Invoicing Discounting, Dynamic Discounting and Self-Funded Corporate Programs

- January 12, 2015 6:06 AM | Categories: Invoicing, Trade Financing

Self-funding has been the primary mechanism to date for corporations to fund invoice discounting and dynamic discounting programs (which explains, in part, why Taulia has been growing so quickly, since they started this model). But how do companies self-fund invoice discounting programs? In a recent white paper, “On-Demand, Event Triggered Finance With Network Models – A Game Changer?,” my colleague David Gustin explains how self-funding programs work in practice.

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Beyond Self-Funding for Invoice Discounting: Third Party Options (Factoring, Bank, Non-Bank and P-Card)

- January 9, 2015 6:27 AM | Categories: Invoicing, Trade Financing

1404632621ye0k6 While much of the interest in P2P and trade financing programs in recent quarters has centered on self-funded (i.e., corporate funded) invoice discounting, there is a whole universe of third party funding options available to support such programs. In a recent paper, “On-Demand, Event Triggered Finance With Network Models – A Game Changer?,” my colleague David Gustin provides a high-level overview of many of them.

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How Your Suppliers Borrow Money: The Evolution of Relationship Lending and Business Networks

- January 5, 2015 10:25 AM | Categories: Learning / Research, Trade Financing

Money in hand Suppliers can borrow money in multiple ways. From lines of credit to mezzanine funding, to convertible debt, the vehicles to access capital are complex and broad. Yet in just about all cases, the origination costs are quite high for different parties involved. As my colleague David Gustin observes in his recent paper “On-Demand, Event Triggered Finance With Network Models – A Game Changer?,” “sourcing deals, underwriting credits and approving/monitoring credits is time intensive and expensive.”

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How Your Suppliers Borrow Money: Understanding Relationship vs. Transactional Lending

- January 2, 2015 6:23 AM | Categories: Learning / Research, Trade Financing

From a procurement perspective, we often think little about what it takes for our suppliers to run their operations. Our risk analyses (think Altman Z) are cursory at best. But just as important as understanding supplier capability and simplistic balance sheet health (and being able to read an income statement) is unearthing how a supplier can access cash to run its business.

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The Irony of Globalization and Trade: Declining Capital Availability and Financing

- January 1, 2015 2:14 AM | Categories: Learning / Research, Trade Financing

With globalization and increased trade flows, could available credit and capital to fuel global supply chains actually be declining? It almost sounds impossible. But financing needs have not kept up with booming global trade between countries, raising risk in the supply chain and creating situations that favor larger suppliers over smaller ones.

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Event-Triggered Finance Goes Beyond Invoice Discounting: Welcome to the New Era of P2P and Supplier Networks

- December 31, 2014 6:05 AM | Categories: Learning / Research, Trade Financing

file1361306993785 My colleague David Gustin recently penned an outstanding white paper that outlines how event-triggered finance can change the receivables and payables financing worlds (including factoring) for good. In the analysis, he takes the worlds of invoice discounting and supply chain finance a step further, investigating scenarios and models that those with a high-level understanding of these capabilities have today. It’s truly essential reading for procurement, accounts payable and treasury and especially chief procurement officers (CPOs) looking to gain a better understanding of the trade financing opportunity in the supply chain.

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How Intercompany Spend Influences Working Capital

- December 24, 2014 2:17 AM | Categories: Guest Post, Trade Financing

In the world of spend analysis, intercompany trade is an important distinction for a number of reasons. As opposed to non-related party trade, intercompany trade impacts working capital, cash management, accounting issues and payments in very different ways. We know many Fortune 2000 companies trade with their subsidiaries in other jurisdictions around the world. The US Census Bureau and the US Department of Commerce collects data that reveals related-party trade accounts for more than 40% of total goods traded. So it matters, and the distinctions matter. Check out this full article at our sister site Trade Financing Matters.

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