The Trade Financing Category

3 Ways Ineffective AP Processes are Endangering Your Supply Chain

Procurement organizations tend to focus on the “procure” part of the procure-to-pay (P2P) process; so much so that the second “P” often has to take a back seat. Yet the payments side of P2P offers strategic opportunities that procurement should consider — as well as critical risks that it must take into account. When AP processes are neglected, they can endanger your supply chain, tarnish supplier relationships, and jeopardize supply quality and continuity. Following are three ways those negative impacts can occur, along with recommendations for turning these possible risks into strategic opportunities.

Everything Procurement Should Know About Payments (Part 6): Payment Best Practices and Recommendations [PRO]

early pay

Our goal in this research series on payments has been to provide procurement with a single point of reference to understand all of the intricacies and challenges associated with standard payment processes today, as well as the limitations of existing procure-to-pay (P2P) solutions when it comes to addressing payments in full. Spend Matters PRO subscribers can access the individual parts below:

The final installment in this series summarizes payment best practices today and provides recommendations to procurement organizations looking to take a leadership role in driving integrated processes that bridge supplier management, transactional buying, accounts payable, payment and working capital management processes.

Everything Procurement Should Know About Payments (Part 5): Dynamic Discounting and Supply Chain Finance Models [PRO]

The payment process is integral to not just transactional procurement, accounts payable and supplier management. It is also an essential component of receivables and payables trade financing models. This fifth installment in our Spend Matters PRO series exploring how procurement touches and is impacted by the payment process provides insight into the intersection of payments and trade financing, especially buyer-led (or influenced) models. See also:

In this brief, we explore the two most popular (non-factoring) trade financing models — supply chain finance (SCF) and dynamic discounting — as well as their payment intersections, especially from supplier on-boarding and enablement perspectives. We also provide an introduction to hybrid early payment and trade financing models.

Everything Procurement Should Know About Payments: Procurement’s Role and P2P Case Examples (Part 1) [PRO]

E-procurement is essentially what is sounds like. The same goes for e-invoicing, too. But when you add payments to the equation, things get messy.

Whether procurement and finance organizations are looking for an integrated procure-to-pay (P2P) solution or standalone invoice-to-pay (I2P) technology, the notion of either solution incorporating end-to-end payment and reconciliation capability is misleading at best. Granted, some providers, such as SAP Ariba and Coupa, have taken steps toward enabling the payment lifecycle through partnerships. But their payment solutions focus on the outcome rather than providing a broader toolbox around payment process management and reconciliation for buyers and suppliers alike.

How can these vendors, which deal predominantly in indirect goods, influence the total payment picture?

This Spend Matters PRO research series unearths the often misunderstood components of the “second P” in P2P. We start with a high-level overview of what procurement systems do (and do not) do today to enable payment processes, as well as what procurement’s responsibilities for payments are (and are not). We also profile what SAP Ariba and Coupa are enabling on the payments front, as well as the general approaches of other vendors.

Subsequent briefs in the series will provide a detailed summary of best-in-class e-procurement and e-invoicing native payment capability and integrations to enable payments, a detailed overview of the invoice to reconciliation process, an exploration of P2P and payments best practices, and guides for how to set up suppliers for payment in a system, the integration of cash management and payments, how to think about trade financing and payments, and the role of shared services in payments.

The Challenges of Supplier Financing Adoption within P2P

finance

Our colleague David Gustin recently published a post detailing the results of a study on supply chain financing over at Trade Financing Matters, and I thought it would be worthwhile to expand the insights gained related to procure-to-pay (P2P) processes and solutions. In his article "5 Hypotheses Tested on Supplier Use of Supply Chain Finance", Gustin explores some conclusions from a study developed by Prof. David Wuttke of EBS Business School together with Prof. Eve Rosenzweig of Emory and Prof. H. Sebastian Heese of North Carolina State University where they observed patterns of conduct on the subject of supply chain financing.

Overheard on the Quad: What We Learned When Supply Chain Finance Went to University

Michigan State University

Even with the increasing shift in focus to the importance of return on investment for a college education, many young men and women these days pursue a college education to answer foundational questions about themselves. It’s no surprise, accordingly, that so many university mottos include the word “veritas,” a nod to students and professors alike searching for “truth.” Likewise, as our sister site Trade Financing Matters explains, supply chain finance recently went back to school, under the tutelage of Professor David Wuttke of the EBS Business School. His team at EBS, in collaboration with Orbian, has been seeking the truth about trade finance, including a few foundational questions of their own.

An Apology to the Factoring Community: When Attempted Humor and Rhetoric Go Too Far

apology

A couple of weeks back, I authored a post on Spend Matters, “Die Factoring, Die,” which was also picked up my colleague, David Gustin, on Trade Financing Matters. The essay attempted to address a serious topic in a humorous, somewhat satirical way, starting with a title that was intentionally overboard. In my attempt to have a bit of fun with the topic of factoring, I failed. I offended a number of people in the factoring community with my language and metaphors.

Executive Q&A with Tom Cross, Hitachi: ‘We Don’t Think Small’

train

Hitachi may be best known for producing a huge range of products, from Shinkansen bullet train cars to the most reliable hard drives to the Magic Wand, but under the hood of the massive global organization and its many divisions, there are individuals doing some crucial, if unsexy-sounding, work. As vice president and general manager at Hitachi Capital America Corp., Tom Cross builds out trade and supply chain finance programs for Hitachi companies and third parties. We caught up with him in an email conversation to get his take on the current landscape within the supply chain finance (SCF) sector.

5 Things to do to Prepare for Extending Payment Terms with your Suppliers

Spend Matters welcomes this guest post from Tom Levene, of The Hackett Group.

Do you pay your suppliers too quickly? New research by The Hackett Group has indicated that 32% of respondents are planning to extend their supplier payment terms. Additionally, our benchmark studies show that many organizations trail industry peers in the key supplier cash flow measure, days payable outstanding (DPO). In these organizations, responsibility for payment terms often spans multiple functions with differing priorities or the value of working capital is not well appreciated. Pursuing a payment term extension program with suppliers can unlock value in your supply chain, but to maximize this value, preparation is key.

ICYMI: The ‘Alternative Version’ of Distributor Finance

distributor

There is a major opportunity for cloud-based, e-commerce platforms to leverage seller-centric distributor finance with OEM manufacturers. This ‘alternative version’ of distribution finance is also suitable for many industries, as David Gustin, editor and co-founder of Trade Financing Matters, recently wrote in an article on Spend Matters, OEM Distributor Finance: The Next Frontier. Yet it’s an opportunity too few are taking advantage of.

OEM Distributor Finance: The Next Frontier

distributor

Trade Financing Matters sees great potential for cloud-based e-commerce platforms to leverage a seller-centric version of distributor finance in OEM dealer/vendor/distributor structures. In this arrangement, the OEM functions as the “middle party” working with its dealer/vendor/distributor network and its network of end buyers (or accounts) to manage invoicing, matching, price validation, dispute management, credit and collections, payments to its dealers and collecting receivables from national account customers.

ICYMI: Oracle Acquires Textura

Last week Oracle announced it would acquire Textura, a provider of cloud-based construction management software, for $633 million. In an article published on our sister site, Trade Financing Matters, members of the Spend Matters Analyst Team took a look at what the deal means for both companies. It’s a “stiff price” for Oracle to pay for Textura, the team wrote, but its offerings will complement Oracle’s existing product line.