Basware and Mastercard – can we automate the reconciliation in P2P and O2C?

- September 18, 2014 2:02 AM | Categories:

Jason Busch recently wrote about Basware and Mastercard’s recent survey of over 1,000 finance professionals (on both the accounts receivables and accounts payables side of the fence) in multiple countries. See Mastercard and Basware – Exploring Payments and Discounting (A Tragic Irony) Basware has the largest electronic invoicing network in the world — one million organizations generating 80 million transactions a year, worth $500 billion, and growing at 50 percent annually. What I found interesting was that 1 in 4 businesses claimed to have highly automated processes with fully optimized systems to manage invoice payment efficiently. I find this fascinating […]

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How Companies Segment Cash to invest in Supply Chains

- September 17, 2014 2:41 AM | Categories: ,

Cash-is-King-300x225 With all the talk about how much cash corporations have to fund their supply chain, I thought it would be a good idea to examine how companies view their cash. Here are three things to keep in mind about a companies cash: First companies segment cash into distinct pools. Operating cash to meet daily cash needs – this has a term of 1 to 30 days and generally is very secure, invested in bank time deposits, high grade commercial paper, and money market funds. Liquid cash to meet projected and unexpected cash needs over 1 to 12 month time horizon. […]

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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 15,000 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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