Big Pharma talks about Lessons Learned Implementing a Reverse Factoring Program

Ben Poole, editor of GT News recently wrote about Roche’s Global Supply Chain finance (SCF) program here. I encourage you to read it.

To summarize, Martin Schlageter, head of treasury operations and Heiko Stangenberg senior cash manager discussed lessons learned implementing a SCF at the recent AFP conference held in Washington D.C. My first thought was where are the Procurement guys? I mean cash guys are cash guys, and any discussion of lessons learned will have a treasury perspective.

Still, there are some good nuggets here. Most of it is common sense, but we all need to be reminded of that. Good horse sense sometimes seems in short supply in this age of tweets.

First, which is an organizational issue, Be Careful of Misalignment - I was encouraged that a big part of the message was aligning Payables, Procurement and Treasury KPIs. Schlageter explained that at the time his team was setting up the company’s SCF program, procurement did not report to the chief financial officer (CFO), and so there were management issues to overcome in order for the program to set up successfully. For instance, good conflict questions to ask include are there conflicting targets (eg. Cash Discounts, Credit Cards and rebates)? And are KPIs managed to the point that no payments are made at the end of the month?

The second point really centers on Tax Planning – How many supplier financing programs are set up – is there one program per country or multiple? One program per currency? Do you have local subsidiaries handle or Shared Service Center?

The third point left me wanting - Leverage your SCF program to implement einvoicing if you lack it. I didn’t find their explanation of how a SCF program really supports einvoicing convincing. I mean, what we are talking about is extracting approved payables to upload to a bank or third party platform. Sure, it would benefit having an envoicing solution in place, but even Roche is only using the program for a few suppliers. But essentially SCF is an issue of extracting ERP information and leveraging ones’ Treasury bank and communication channels.

Finally, they talked about Harmonizing your Supplier Master data globally – Good luck. No seriously, I am sure this was a major project for someone the size of Roche, particularly as they wanted the program to be global.

My one disappointment is they did not talk about the number of suppliers or the size of the program. Again, these programs are not typically for the SMEs as the onboarding costs are too high relative to the volume.

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