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Improving TFM and Making Sense of Invoicing Discounting, Supply Chain Finance and Other Programs

RFP

One thing that continues to amaze me about the tech side of the receivables and payables financing markets is the information vacuum in the sector and how little different parties and participants know about each other. One could say that this is just banks living in their own world. But it’s not. There are some exceptions and a handful of folks I’ve meet with the sector, including on the banking and treasury sides, are exceptionally deep. But for 99% of folks involved in this community, including at tech vendors and within procurement, there’s greater uncertainty than certainty about what others are trying to do – or doing. Even from a definitional standpoint, few are even on the same page. Perhaps this is because we’ve not fully done our part yet in covering and analyzing this market – and there is no doubt we can improve. So, I’d like to toss a few questions out to the Trade Financing Matters audience about how best we can collectively address this information asymmetry and disconnect.

Devalued and Risky: Should You Proactively Finance Chinese Suppliers?

The level of nuanced arguments surrounding China’s dual-move to a more freely floating currency, combined with an immediate devaluation – close to 5% at the time of writing this piece – has reached a fever pitch in international business circles. Aside from my own views about China’s general behavior from a business context, I personally believe it’s an ingenious move of desperation that would have been difficult to predict ahead of time.

From a sourcing perspective in terms of negotiation with suppliers over price decreases, we recently shared some advice for our subscribers on Spend Matters in a research brief, What a Devalued Chinese RMB Means For China Sourcing Strategies. But speaking more broadly than negotiating price decreases as a result of the devaluation, there is the broader question of supply risk with Chinese vendors – and the level of action companies should take to protect their supply chains through active trade financing programs.

Ariba, SAP and Financing the Supply Chain: What’s Next – Partnerships, Acquisitions and Other Ideas

partnership

Earlier this week, I shared a quick update on where Ariba stood as a quiet but material player in the invoice discounting market. It’s important to note, however, that invoice discounting alone is but one small – and barely penetrated – sub-sector from an adoption standpoint within the tech and purchase-to-pay- (P2P) enabled trade financing area. Ariba and SAP have significant opportunity to become a leader in this still exceptionally fragmented and nascent market segment. While it’s unlikely they will truly remake their procurement, accounts payable and treasury business lines around the next wave of trade financing – as Basware and others are placing significant bets on – we firmly expect to hear much more from the ERP and cloud giant in 2016. Here are some speculative partnerships and moves we expect Ariba, Concur, Fieldglass and SAP to consider as they expand their presence in the trade financing market.