Many of the Fintech lending initiatives have been dead set on helping the poor small business (“SMB”) that in the past had to borrow on […]
At one point in time, GE’s Commercial Distribution Finance Corporation provided $30 billion in annual inventory financing to the technology, electronics and appliances, powersport, marine, […]
Invoice auctions were a novel and innovative idea a few years back. From a seller’s perspective, auctions provide liquidity, a form of ad hoc, transactional […]
The idea of creating an electronic auction marketplace for investors to purchase assets (in this case invoices, or future dated cash flows), was novel back […]
So far in this series examining finance and procurement alignment, we noted that the coordination between the two functions, especially within the accounts payable and transactional purchasing areas, can bring greater savings opportunities that can be achieved with each individual function pursuing its own initiatives. In particular, we observed that when procurement and accounts payable had aligned systems, processes and goals (ideally in that order) they achieved savings significant beyond what each function can deliver individually.
After giving shareholders an 85% haircut from their trading highs, Tungsten decided to unwind one part of their original IPO strategy – buying a bank […]
I recently revisited a paper I wrote a number of years ago, E-Invoicing Comes of Age - Discovering What's Possible From the Latest Electronic Invoicing / Invoice Automation Capabilities, that covers a number of purchase-to-pay (P2P) fundamentals, including what to prioritize when putting an electronic invoicing program in place. Few of the arguments I make in it are any less relevant today than they were 5 years ago. One of the ideas in the discussion is the importance of addressing quality at the source when it comes to e-invoicing – and putting as much back on the supplier as possible, as well as having an e-invoicing program or supplier network do the heavy lifting with pre-validations before information is directly matched against or integrated with ERP or e-procurement systems.
Earlier this week, I shared a quick update on where Ariba stood as a quiet but material player in the invoice discounting market. It’s important to note, however, that invoice discounting alone is but one small – and barely penetrated – sub-sector from an adoption standpoint within the tech and purchase-to-pay- (P2P) enabled trade financing area. Ariba and SAP have significant opportunity to become a leader in this still exceptionally fragmented and nascent market segment. While it’s unlikely they will truly remake their procurement, accounts payable and treasury business lines around the next wave of trade financing – as Basware and others are placing significant bets on – we firmly expect to hear much more from the ERP and cloud giant in 2016. Here are some speculative partnerships and moves we expect Ariba, Concur, Fieldglass and SAP to consider as they expand their presence in the trade financing market.
Should Procurement Organizations Prioritize Invoice Discounting Over Other Trade Financing Approaches?
Invoice discounting programs that rely on underlying e-invoicing capabilities make perfect sense on paper. But to date, the vast majority of organizations implement e-invoicing programs to meet regulatory requirements or drive operational efficiencies before scaling discounting components of a program. Even those organizations that engage with an e-invoicing provider or supplier network vendor offering discounting capabilities often consider these programs as part of a second phase roll-up rather than an initial priority. There are practical reasons for this, given the relative immaturity of many accounts payable organizations combined with questions that treasury may raise in the process of considering invoice discounting initiatives that are internally funded. But in reality, with the right strategy defined and set in motion, there is no reason not to prioritize invoice discounting as the centerpiece of a buyer-led trade financing program.
Late last year, David Gustin penned probably the best white paper on the future of trade financing. In his analysis, David argues that there are 6 specific triggers for potential intermediated or early payment: signed contracts, the issuance of a purchase order (PO), materials ordered by suppliers, shipping status, invoice issuance and invoice approval. From a traditional indirect or even direct materials procurement scenario, these steps make complete sense as potential financing triggers, and they are certainly triggers for payment in the offline factoring world today. But if you open your mind a bit to other potential triggers in different areas and scenarios, the prospects become quite interesting indeed.
UPS Capital, a subsidiary of UPS, provides insurance, financing and payment services that are unique, relevant and competitive. I have heard UPS Capital, which is […]
Post five on Electronic Invoice Marketplaces looks at both the Investor and Seller downsides to invoice auction markets There are several challenges when buying receivables […]