Congrats on C2FO for building a network particularly in the retail, technology and CPG space where you can go to Fortune 100 and say 30% […]
As more companies adopt early pay programs, including self-funded and third-party supply chain finance (“SCF”) programs, it’s important to understand the accounting implications of all […]
I am excited to be heading to San Francisco to network with Taulia, its’ customers, prospects and partners, as well as other analysts to hear […]
Middle Market companies play a vital role in most countries. In the U.S., middle market companies (defined as having annual sales between $50 million to […]
In today’s exciting world of Buyer-led finance, one must remember that companies do not just sell to one buyer. In fact, a company could sell […]
In banking, technology and treasury circles, one rarely hears any mention of Ariba in regards to trade financing these days. Compared with other B2B tech plays making plays these days on the financing side around new or expanded initiatives such as Taulia, Basware, C2FO, Kyriba, Prime Revenue and others – often times in very different ways and different markets – Ariba has been relatively quiet of late surrounding new initiatives. (But there does appear to be some activity behind the scenes – more on this in the next installment of this series.) The one area that Ariba has quietly been promoting is invoice discounting adoption. This is not bad. In fact, it probably makes Ariba one of the larger providers today with an electronic invoicing or supplier network capability tied to some type of invoice discounting solution.
An Internal Checklist for Procurement: Are You Ready to Implement a Trade Financing or Invoice Discounting Program?
With an increased awareness over reducing supply risk and implementing working capital programs, the world of trade financing is increasingly coming to procurement and supply chain organizations. In addition, many procurement organizations are entering new levels of maturity with their purchase-to-pay (P2P) programs and systems that can serve as a foundation for a range of trade financing initiatives, starting first with approved invoices as a trigger for early payment. But trade financing can appear complicated from the outside. To assess whether you’re ready to take the plunge in developing and implementing a broader trade financing strategy with a procurement-centric (i.e., holistic supplier engagement that balances a range of elements) model in mind, you need to ask yourself a few questions first.
To understand how to most effectively, affordably and sustainably accelerate the flow of cash in the supply chain for all parties, understanding the history of the market itself is essential. An understanding of the structural changes that have taken place with purchase-to-pay (P2P) technologies in recent years, which stand to usher in a new era of early payment programs, is vital as well. My colleague David Gustin recently penned a paper, Accelerating Early Payment: Techniques and Approaches for Accelerating Cash in the Supply Chain, that provides a great overview of the topic for those just getting into it or looking to accelerate their knowledge of the different programs available from procurement and accounts payable perspectives. But even before exploring these options, it is important to understand the evolution of transactions between buyers and suppliers.
My colleague David Gustin recently penned a paper that summarizes many of the techniques to accelerate early payment in the supply chain. As he frames the argument, “Everyone – including the White House, UK and European public sectors – agrees there are significant benefits that come from accelerating cash in the supply chain.” Yet even while politicians and businesses can agree that the benefits of accelerating payments is real in terms of economic impact and supply chain stability, there are underlying challenges in the structural notion of what has led to the need to accelerate early payments.
David Brown, founder of both Oxygen Finance and Remitia, is passionate about getting payment in the hands of SMEs as fast as possible. In a recent blog post on the topic, David notes that, based on research he’s looked at in the UK, “£41 billion of payments to suppliers are considered late. We have not been able to confirm what late specifically means in practice, 30, 60, 90, 120 days etc., but what we do know is that out of this £41 billion in late supplier payments, £36 billion is owed to SMEs.” The implications of this are significant indeed.
Yesterday, I covered a number of challenges around the issue of early payment solution provider proliferation and supplier confusion. Yet it is excitement and change in the market that is in large part leading to the confusion itself. What’s driving part of the excitement – actually a large part of the excitement in procure-to-pay-based lending – is the data that sits inside networks like Tungsten, Basware, Taulia, Nipendo, Ariba, GT Nexus and others. The combination of this data with external data is nirvana for anyone with a doctorate in statistics or mathematics. As with program trading on Wall Street, you can model risk and behaviors.
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 […]