E-invoicing and purchase-to-pay solution provider Basware and European-focused alternative asset manager Arrowgrass Capital Partners LLP have teamed up to introduce a new company: Virtaus, which Spend Matters UK has called “a significant new supply chain finance product.” Virtaus will manage Basware Advance, which can help organizations gain visibility into the payment process, offering better control over cash flow.
Category Archives: Trade Financing
Looked at from an industry perspective, dynamic pricing and auction mechanisms have become the awkward middle child of procurement, supply chain and trade financing technology. What used to be the centerpiece of business models has become a secondary component of most procurement suites and technology models — or is downplayed as a feature rather than something at the core. To me, this is a shame.
In this Spend Matters PRO article, we explore what the Basware Commerce Network delivers, going beyond improving the e-invoicing and procure-to-pay process alone. Basware is making some major bets on supply chain finance (definitionally speaking in our vernacular: trade financing) as the centerpiece of its future network value proposition. But will Basware succeed where Ariba and SAP to date have not yet driven financing liquidity outside of the occasional transaction in which early payment is affected? It’s a tricky question to answer, but Basware is throwing multiple irons into the financing, payments and working capital fire.
Even though my colleague David Gustin covers such topics in much greater detail on Trade Financing Matters, I find fascinating the early fronts that appear to be forming in the battle for lending and small business financing — beyond the traditional arms of banks, invoice discounting and card programs. The Wall Street Journal recently covered how Intuit’s QuickBooks and OnDeck are partnering to offer loans based on invoice information, receivables and other information contained within a company’s general ledger on the system.
Back in early 2014, Trade Financing Matters’ David Gustin noticed some major changes in the supply chain finance space. Banking and financing firms were increasingly partnering with various supplier B2B networks at a rapid pace. He pointed to this growing trend in one of our popular Ask the Expert webinars, which originally aired in April 2014, titled, Ask the Expert: B2B Commerce Networks Enter the Supply Chain Finance Space. You can check out the full recording of the webinar in this post and learn the difference between trade credit and trade finance and what exactly supplier networks are, how they operate and more.
Trade financing is a broad-based term we can use to encompass a range of receivables financing and payables financing techniques. The difference between the 2 types is relatively simple: Vendors are in control with receivables financing program, and payables financing programs are buyer-led. There are a range of common areas of trade financing programs today outside of global trade-centric programs and products. These include: supply chain financing (i.e., an uncommitted credit facility, typically with companies at or near an investment-grade credit rating), dynamic discounting, reverse auctions and auction marketplaces, buyer-led invoice finance, p-cards, seller auctions, factoring and invoice finance. For further information and definitions of these programs, download the Spend Matters Perspective: Understanding How E-Invoicing Fits.
On this Flashback Friday, we are looking back to another popular Ask the Expert webinar we held back in April on current trends in trade financing. Spend Matters’ Jason Busch and Trade Financing Matters’ David Gustin teamed up in Ask the Expert: The State of Trade Financing Technologies to provide an impressively detailed overview of what’s happening in the trade financing world and how these events are signaling a changing market – all in under 30 minutes. Check out the full recording of the webinar and tell us if you have seen these trends play out during the second half of 2015.
I have spoken at many conferences over the years, and people ask all the time what conferences to attend. The answer is always the same – it depends. A conference like Lendit can draw 2,500 people today, given the hysteria with all things fintech. Traditional lending conferences, however, struggle to get 1,000 at their annual events. I find some of the best conferences come when the material is focused and flows – they don’t try to cover the world. Instead, they come at it from a practitioner's point of view and minimize the number of consultants giving presentations.
The latter approach will be on display at Exchange Summit 2015, at which I’ve been invited to give one of the keynotes. Given the expectations and sophistication of the audience, the pressure will be on to deliver insights that matter.
Infor announced Tuesday it was acquiring GT Nexus for $675 million. The transaction is expected to close before the end of September, based on regulatory approval. Infor has a long history of financially-driven acquisitions that keep investors happy and deliver enough innovation to customers to keep them on their systems. But the GT Nexus deal appears to be something more. The worlds of ERP and global trade are so sufficiently different that to combine 2 companies serving these markets effectively will require a new approach and vision – or as CEO Charles Phillips labels it, “postmodern ERP.” Indeed it is.
Efficient accounts payable (A/P) automation provides options for the company’s CFO. Faster invoice approvals allow CFOs to make decisions on whom to offer early pay acceleration, how to use the company’s cash positions and whether outside sources of funding should be engaged. Early pay acceleration on approved invoices does not require a company to go through the process of securing a revolving credit facility or an additional line of credit at its bank. Programs can be done by any corporate – investment grade, non-rated or non-investment grade. In addition, early payment can be offered on all invoices approved, opening up broader procurement spend, not just invoices for suppliers that are approved and ready within the allotted time period.
For more information, check out the Trade Financing Matters research paper, “Accelerating Early Payment: Techniques and Approaches for Accelerating Cash in the Supply Chain.”
Companies have a range of suppliers, but they typically fall into 3 broad categories: critical, non-critical and core and important. While the world is more complex than the above segmentation, a typical Fortune 1000 company may have as many as 160,000 suppliers, of which 10,000 are for production and 150,000 are indirect. When considering early pay acceleration opportunities, these organizations need to consider a menu of solutions, including a variety of techniques we explore and further segment in the paper Accelerating Early Payment: Techniques and Approaches for Accelerating Cash in the Supply Chain.
David Gustin, executive editor of our sister site Trade Financing Matters, maintains that accelerating cash in the supply chain will lead to positive results. He isn’t alone, as the White House, UK and European public sectors also support such programs. So, now that we have that out of the way, we can focus on the specific options and benefits for both buying and supplying organizations involved. Accelerating Early Payment: Techniques and Approaches for Accelerating Cash in the Supply Chain is now available for FREE download. Get your copy today!