Measuring SupplierPay

- November 24, 2014 9:54 AM | Categories:

20141117_144936 The goal of the initial SupplierPay kickoff meeting was really to find a way to collect and report on the success of the program. The White House hired an outside facilitator group to help brainstorm ideas here. We broke out into four working groups to address four questions: What data might be collected? How might it be collected? How frequently? What might be reported? Sure there will be great anecdotal stories to tell how Mom & Pop got their money faster, but ultimately, show me the money. I think the group recognized this was not going to be easy. A […]

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Understanding Intercompany Spend and Working Capital

- November 24, 2014 3:51 AM | Categories:

Spend analysis is all the rage these days but one thing that is important to bear in mind is the amount of intercompany spend that goes on and why that matters. What I call Non Related party trade has significant differences to Related Party (or intercompany) trade. First some definitions according to the U.S. Foreign Trade Statistics Regulations, who define a related party transactions as one between a U.S. exporter and a foreign consignee, where either party owns, directly or indirectly, 10 percent or more of the other party. Related party trade is not trivial. The U.S. Census Bureau, U.S. […]

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Initial White House SupplierPay observations

- November 21, 2014 2:04 AM | Categories: ,

photo As I sat in the room of Titans at the latest SupplierPay session in D.C., the key question running through my mind was what role do we want the feds to play dictating payment terms? I think the U.S. Small Business Administration and National Economic Council really want to create a win-win here, and recognize the importance of small business to the economy (as well as how extended terms can destroy a small business). Right now, the White House does not what to define what “small” business means. The SBA certainly has definitions related to headcount and revenue, and the […]

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White House SupplierPay Session Kick Off

- November 19, 2014 11:06 AM | Categories:

photo On Monday, 17 November, the White House held a meeting with close to 50 corporate attendees around the SupplierPay initiative. It’s not often you get the opportunity to travel to Washington DC and be invited to speak. When my 17 year old triplets caught wind of this, I immediately went from Old Man back to my days of Superman, at least for a small chunk of time. The White House released their press release on the day of the event, excited that 21 new companies signed the pledge. See President Obama’s SupplierPay Initiative Expands.  I mean what CEO is not […]

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The Unintended Consequences of Legislating Late Payments

- November 19, 2014 6:32 AM | Categories:

The UK Government has set up a Prompt Payment Advisory Board to help businesses tackle late payment. The board will focus its efforts to promote awareness of the Prompt Payment Code and monitor how companies are adhering to it. The code sets out principles for businesses to follow when dealing with and paying their suppliers. More than 1,700 businesses and public authorities have so far committed to these principles. I think it is really admirable to help expedite payment to small business. And there are certainly many initiatives corporations can take to enable their suppliers to get payment immediately upon […]

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P2P Lending, Loss Rates, and Risk Mitigation

- November 18, 2014 4:24 AM | Categories: ,

rain_umbrella_pink It’s been almost a decade since the first UK P2P Lender Zopa launched, back in April 2005. In the analog world, relationships mattered. In a digital one, it seems data is the only thing that matters. And for small business, a crowdfunding or P2P platform plays the role of the trusted intermediary to conduct business, supplanting the banks. I spoke to the Asian retail banking head for one very large global bank. His comments about all this were interesting, and are summarized below: What compels the customer to pay money back other than reach of law? There is no relationship […]

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How does a P2P Network help with Invoice Fraud

- November 17, 2014 4:46 AM | Categories: ,

If you are factoring an invoice, you are concerned about Fraud and Dilution. In traditional receivables financing, there are numerous risks that lenders face including fraud risk and the need to constantly monitor the credit worthiness of the supplier. Lenders must constantly collect information from suppliers, such as third-party credit data, invoices, payments, etc. This drives up the cost of financing for suppliers. Recent large scale example of invoice fraud with the Italian government continues to highlight the need for initial and on-going seller due diligence and proper underwriting. TheReceivablesExchange also experienced several cases of fraud. It happens. Dewey & […]

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Banks, Not Investors, still Funding many Vendor Platforms

- November 13, 2014 3:43 AM | Categories: , ,

I recently did a post where I sized the supply chain finance application market, see Supply Chain Finance Application Market Still Small Some of these vendors rely heavily on the banking community for their fee income (ie, the banks fund their programs off their platform, in essence, a cash for asset deal). From a corporate perspective, this poses two risks: First, the bank may not be in a position to fund the program over time. This could happen for a myriad of reasons, and shortage of capital is a prime one – see post European Banks need to raise 700+ […]

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Alibaba’s Banking Strategy

- November 12, 2014 3:10 AM | Categories:

Alibaba has eight major businesses — Taobao Marketplace, Tmall.com, Juhuasuan, Alitrip, AliExpress, Alibaba.com, 1688.com and Alibaba Cloud Computing — but most of its revenue comes from online Chinese marketplaces, Taobao and Tmall. You would think by all the noise you hear that they will completely disintermediate banks. In fact a survey we jointly did with Misys, they were the most feared competitor (Amazon as well). So where are they in banking? A few weeks ago, Alibaba’s finance arm rebranded their “Small and Medium Financial Services Company to “Ant Financial Services Group” (AFSG).  AFSG is comprised of various businesses: Alipay – […]

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Rush for IPOs Continues with P2P lenders

- November 11, 2014 10:54 AM | Categories:

Investors are in love with P2P lenders. And On Deck Capital is taking advantage by filing to raise up to $150 Million amid strong Investor appetite for the burgeoning sector. According to On Decks filing statement, The small business lending market is vast and underserved. According to the FDIC, there were $178 billion in business loan balances under $250,000 in the United States in the second quarter of 2014, across 21.7 million loans. Oliver Wyman, a management consulting firm and business unit of Marsh & McLennan, estimates that there is a potential $80 to $120 billion in unmet demand for […]

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Tungsten’s Analytics Offers Banks a Challenge

- November 10, 2014 4:58 AM | Categories:

Citibank takes Spend Analysis one step further with new Integrated Payable Solution Citibank’s Integrated Payable solution tool is an example how a bank can leverage their payment and finance capabilities and combine them together with analytics. The bank has Innovation Labs in Tel Aviv, Singapore and Dublin and this initiative came out of the Singapore Lab as a working capital tool. It takes both in-house data and client data and puts forth some observations and what-if analysis. What makes this solution powerful is that it sits across a number of business units for the bank, including trade finance, commercial cards, […]

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Warburg Pincus exploring Sale of GT Nexus with Morgan Stanley

- November 7, 2014 2:40 AM | Categories:

GT Nexus and TradeCard, two cloud-based technology companies specializing in supply chain management, merged in early 2013. Warburg Pincus provided the start-up financing for both companies, with TradeCard starting back in the late 90s. The WSJ recently broke the story that GT Nexus Inc. is exploring a sale. Warburg has desired to exit north of $100M in revenue, claiming this is good revenue for a software as a service business. With a reported valuation of $800 million (that’s the reported value that SAP bid to buy GT Nexus earlier in the year), that puts this cloud computing company at projected […]

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