When it comes to the intersection of purchase-to-pay (P2P) and financing options, there is no shortage of available techniques to address early payment programs to suppliers. As David Gustin notes in the Trade Financing Matters research paper, Accelerating Early Payment: Techniques and Approaches for Accelerating Cash in the Supply Chain, these techniques can be generally segmented into buy-side and sell-side categories. Buy-side approaches suggested include: p-cards, dynamic discounting, static discounting and reverse factoring, commonly called supply chain finance. Further, “On the buy-side, large and mid-sized corporates want to optimize payment terms and maximize their working capital, while not punishing suppliers by making sure they have options to liquidate their receivables. Buy-side solutions require an approved invoice from the company to release cash.”
Category Archives: Trade Financing
Many outside of accounts payable and procurement fail to realize that most companies have not standardized their payment terms to suppliers. Or as my colleague David Gustin, of Trade Financing Matters, notes in his paper, Accelerating Early Payment: Techniques and Approaches for Accelerating Cash in the Supply Chain, “For most large corporates, there are no standard payment terms. Their payment terms vary across divisions, jurisdictions and through acquisition. Over time, a large company may have more than 50 different terms.” This proliferation of terms has become often low-hanging savings fruit for consultants that come in and look to identify opportunities, even inside more sophisticated accounts payable and procurement organizations. But to fully understand this trade financing terrain, a bit of history and context is necessary.
The global powers don’t agree on a whole lot but they do agree on one thing: there are substantial benefits to accelerating cash in the supply chain. The US government, UK and European public sectors are all convinced that there are benefits, but what those benefits are exactly may not be well known. From our sister site Trade Financing Matters comes this new, FREE research download: Accelerating Early Payment: Techniques and Approaches for Accelerating Cash in the Supply Chain. David Gustin, executive editor, outlines the specific benefits of accelerating cash in the supply chain as well as current alternatives and the pros and cons of different models for buying and supplying entities. Get your copy today!
Supplier collaboration platform Tradeshift hasn't been well known for finance outside of accounts payable. It has offered dynamic discounting, to be sure, but the feature has been used by only a handful of clients. That approach is about to change, however, as explained in a breaking article on Trade Financing Matters. As of Tuesday, Tradeshift will partner with C2FO, giving it access to the financial technology company's working capital market as an internal app. It’s clever on the surface, analyst David Gustin and Xavier Olivera explain, but how will the partnership work in practice?
US-based supplier diversity programs often represent one of the true success stories of niche-based initiatives that can have real impact with limited budget and resources. Most programs at larger companies still only have a single or handful of dedicated resources and budgets – at best – for supporting technology and data enrichment to manage and track supplier credentials, and reporting pales in comparison to other procurement solution areas. Yet the quantification of program results, including those in which diversity improvement is mandatory in government supply chains, often speaks for itself. Might early payment programs, either by requirement or encouragement, be the next logical step to link to supplier diversity efforts?
When it comes to encouraging the use of e-invoicing, payment or trade financing standards and expectations, government moral suasion is terribly ineffective compared with government regulation and policy. Consider the case of the White House-led SupplierPay initiative compared with regional initiatives centered on e-invoicing adoption in Latin America. My colleague David Gustin recently opined on the topic on Trade Financing Matters – read on to hear what he had to say about it, specifically how the program lacks real teeth.
Over on Trade Financing Matters, my colleague David Gustin makes a rather astute observation when he notes in his post titled "It's a Fallacy that Procurement Manages ALL Spend", that “in very few organizations does procurement have total control of spend.” David gets his procurement mojo on – especially for a trade finance guy – when he further observes that: “[W]ho is best to understand the compliance issues around a complex bill of materials?…Take this one step further and how do you manage the connected commerce world for direct spend? We know EDI and EDI integrators have been doing it for decades – shout out to companies like GXS/OpenText, Sterling, etc. ..." Read on to see further insight from David and our analysis on this issue.
Welcome back to another edition of the Spend Matters Network roundup, where we give you the most noteworthy articles from the week published around our websites. Spend Matters has in-depth coverage from Coupa Inspire, Spend Matters UK introduces it "hot topic" for the month of June: tail spend management, and Public Spend Forum Europe offers insights from the recent e-public procurement conference in Porto. MetalMiner shares expert insight on rare earth, steel and aluminum prices and Trade Financing Matters discusses the White House's SupplierPay initiative. Check all the articles out here!
Two weeks ago saw a material drop in Tungsten’s stock price (over 20%) – a trend that continued early the following week – only to be reversed after a secondary offering that provided support for the stock (at the time of writing, the stock price had rebounded 25% off of its lows). But the initial downward stock movement almost has seemed detached from the revenue results of the business, which the firm said would beat guidance. However, there is other news in the story – much more news, in fact, which is far more interesting than the high-level numbers, or even the stock drop or appreciation. Moreover, just as Ariba was an important stock to watch as a proxy for the sector – and which we profiled when it was independent during most quarters – so, too, is Tungsten in the supplier network and technology-led trade financing market. In this Spend Matters PRO analysis and research brief, we consider some facts and figures surrounding Tungsten’s results and how we read into them from an overall market perspective spanning e-invoicing, invoice discounting and supplier network capabilities.
In a recent Ask the Expert webinar, Jason Busch and David Gustin joined forces to talk about what the latest is in the trade financing world – what is happening now and what we should expect in the future. You can check out the full recorded webinar here: Ask the Expert: The State of Trade Financing Technologies. Jason and David dissect the trade financing market – find out what's happening with solution providers, partnerships and what the current landscape looks like. As they say, there is lots of hype happening," but it's not all pretty!"
Here on Spend Matters, we have written a lot lately on sustainable supply chain practices – specifically, with regard to McDonald's recent announcement it would take efforts to rid deforestation from its supply chain. Our sister site Trade Financing Matters also recently discussed the issue of sustainability in the article: Palm Oil and Sustainable Trade Finance. David Gustin, author of the article, writes about the problems with palm oil sourcing around the world. While the oil is in high demand, as it is used in a wide variety of products from soaps and lotions to foods, it's production can be problematic.
No time to wait! Register now for Thursday’s pop-up webinar at 10:30 a.m. CDT and learn How E-Invoicing Fits – A/P Automation, P2P, eProcurement, Trade Financing, Compliance, and Vendor Management. Join Jason Busch, founder and managing director at Spend Matters, and David Gustin, executive editor at Trade Financing Matters, as they address the most commonly asked questions regarding e-invoicing and supplier networks and how they fit into overall accounts payable, procurement, P2P, risk management and treasury.