PrimeRevenue data supports efforts on Supplierpay

- September 16, 2014 3:30 AM | Categories: ,

hrmvEDa-_400x400 The folks at PrimeRevenue were kind enough to share some data with me recently regarding small business usage of their finance programs. PrimeRevenue supports over 50,000 suppliers globally, so they sit on a wealth of data around payment terms, impact of early pay, etc. What makes this data so interesting is that it comes from their actual transaction throughput. It is not “survey” data which comes from online surveys filled out by anonymous souls. It represents actual invoices being paid. What I found interesting is how this data counters the REL Hackett Fortune 500 report that DPO at global corporates […]

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Quickbooks sitting on 5 million Small Business companies that need finance

- September 15, 2014 3:16 AM | Categories:

qbfapplication Quickbooks Financing is still in start-up mode within the larger Intuit enterprise, but they sit on an ecosystem of over 5 million small business customers of online and desktop users (out of 27 million in USA) with $2 trillion worth of invoices. In surveys that they’ve done, the small business feedback has been 70% were declined for bank loans. The premise was that it was difficult for banks to analyze the small business applicants in a cost efficient manner.   I’ve touched on this before in a series I did on Why Banks don’t lend to Small Business – Part I […]

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Options to Buy Trade Finance and Trade Credit Assets are Growing – Part 2

- September 11, 2014 4:30 AM | Categories: ,

The disruption occurring around working capital business banking is in the early days, but between “information advantaged” finance models and more expensive bank equity, start-ups today can be major threats tomorrow. For trade credit, or what banks call open account, the largest potential threat to banks is not other banks, but third-party funding models. This definition of third-party funding can apply to a number of early pay techniques, including: Bank Approved Trade Payable programs (or Bank Supply Chain Finance) Factoring Dynamic discounting / early pay techniques Pcards A lot of this can be understood by the following formula: Big networks […]

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Disruptors, Innovators and Disintermediation – Should Banks Really Care?

- September 10, 2014 5:07 AM | Categories: , ,

index Most would say I drew the short straw in debating Jason for the Great Open account debate. First, it’s Jason: young, fit and very smart. Second, I drew the banks. Banks are less popular than going to the dentist (I really did see a survey on this and found it hard to believe anyone would fund this research, let alone choose going to the dentist over a bank branch). Jason argues that here’s a storm of “new” finance brewing on the horizon. (See Trade Financing Disintermediation: Get Ready For the Accelerating Decline of Banks) There is no question that there is […]

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Options to Buy Trade Finance and Trade Credit Assets are Growing – Part I

- September 10, 2014 2:36 AM | Categories: ,

Bank’s have been looking to distribute trade finance assets off their books for a number of years because their equity has become increasingly expensive, especially for low risk weighted assets. This has also occurred during increasing compliance costs. Banks have experimented with a number of techniques to take trade finance assets off their balance sheet in what I call an originate to distribute model. None of these efforts are trivial, cheap, or transparent. As I mentioned in a previous post, the term “trade finance” is generally reserved for bank products that are specifically linked to underlying international trade transactions (exports […]

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Government Receivables Represent Great Financing Opportunity

- September 9, 2014 3:33 AM | Categories: ,

With so much attention devoted to SupplierPay, I thought it would be good to see how the government backs up what they preach. When the U.S. government shut down from Oct. 1 through Oct. 16, 2013, the effect on the government contractor community was swift and harsh. The effect was particularly brutal for contractors providing staff, a big part of the contracting community, such as – landscapers, maintenance, security guards, medical, IT, etc. Firms providing these services have an immediate need for payroll and it may take up to 45 days or more to get paid. There are a few […]

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More states Put in Prompt Payment Laws, Impacting Early Pay Solutions

- September 8, 2014 2:57 AM | Categories: ,

While SupplierPay from the White House gets all the press, U.S. states like Texas, Maryland and Massachusetts have implemented prompt pay laws. In the case of Texas, their prompt payment law sets when some types of payments are due. In Texas, a state agency’s payment is due on the 30th day after the latest of: The date the agency receives the goods under the contract, The date the vendor completes performing its services for the agency, or The date the agency receives an invoice for the goods or services. The Texas process for suppliers to get paid include these steps: The […]

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Credit Default Swaps, Defaults and What Really Happens

- September 5, 2014 3:44 AM | Categories:

When Banco Espirito Santo SA credit-default swaps were devalued last month after the Portuguese bank was rescued and restructured by the government, it was a real test for the Credit Default Swap market. For those that are not familiar with this risk mitigation tool, Credit Default Swaps (“CDS”) offers an alternative to trade credit insurance to protect companies when lending to either corporates, banks, or sovereigns. One of the key differences with credit insurance is that CDS only covers bonds and bank debt on public companies and also do not cover corporate receivables. It is a sizable business, with $19 […]

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Why Factors Should Care That We Are Moving From Analog to Digital

- September 4, 2014 1:33 PM | Categories:

Banks and other lenders face challenges from up-starts (e.g., Tungsten, Taulia, Nipendo, Amazon, Basware Pay) and non-bank lenders (e.g., private equity, asset manager) when it comes to financing trade today. These new models are leveraging data, algorithms, and non regulatory money to provide a source of lending to vendors that previously had to wait until their buyers paid the bills. My colleague Jason Busch believes banks will face this disintermediation quite aggressively in the coming years. He says, I have a strong feeling that traditional banks are going to face a rising tide of disintermediation from alternative lenders that leverage […]

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Where Early Pay solutions could benefit

- September 3, 2014 10:47 AM | Categories: ,

Many companies have developed early pay solutions to provide some form of liquidity to their supply base. And why wouldn’t they. Having technology in place to help with einvoicing, workflow, routing, exception management, supplier portals, etc. while of extreme value to a client, comes with severe transaction pricing pressure. There are just a lot of solutions to choose from See Jason’s piece on Supplier Networks and Einvoicing selection strategies So the rush, and some would say gold rush, to add finance applications to these solutions makes sense. Why not? If you can not only help the buyer with internal efficiency, […]

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How Large Commodity companies use Finance to gain Advantage

- September 3, 2014 3:14 AM | Categories:

Big Commodity companies like Cargill, Bunge, Trafigura and Vitol all run very complex financing operations.   For example, Cargill runs an internal Hedge Fund to provide competitive advantage vis a vis competitors. Many of these companies will have internal Trade & Structured Finance groups that focus on a variety of things Manage local currency exposures in emerging market currencies, especially ones which have strict FX Controls. This includes balancing the needs of repatriatiating capital versus the need for local currency to finance growing and harvesting in the currency. During the offseason, when cash is in surplus, the group must find ways […]

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HSBCs Trade Forecast Tool left me wanting more

- September 2, 2014 2:06 AM | Categories:

hsbctool1 For companies doing business overseas, and increasingly that means many more smaller companies, understanding currency issues, foreign exchange controls, basic bank account information and other block and tackle information to move money and control risk with trading partners is crucial. HSBC’s Trade Forecast Tool, a new mobile app, claims to go one step further and help you predict trends and make informed decisions about where and when to make your next move. Here is what HSBC says the Trade Forecast Tool can do to help business leaders make informed decisions: explore a worldwide or country overview of the short-term confidence […]

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