Oracle announced Thursday it agreed to acquire Textura, a cloud-based solution for the construction industry with end-to-end capabilities spanning from initial bid estimation and sourcing through to subcontractor management, communication and collaboration, invoicing and payment. The $633 million transaction values Textura at roughly 8X trailing revenue and represents an over 30% premium to the previous day’s close, a stiff price for a product that will complement one of Oracle's existing solution lines.
The United Nations Conference on Trade and Development (UNCTAD) is calling for reforms to the international monetary system, saying the need for government to support long-term development finance on domestic and international levels has “not been met” thus far. Trade Financing Matters believes that alternative financing models based on tech-enabled receivables financing and payables financing offer strong potential to serve developing markets.
There are industry analysts and there are paid mouthpieces.
Unfortunately, many are increasingly falling into the latter category. And as Ariba has begun share top marks with Coupa or fall behind in the traditional analyst rankings by Forrester and Gartner, it has increasingly ramped up its efforts with the latter group.
While I have no idea about the economics of this review by Ovum, which I read in researching some recent posts on the Ariba network and trade financing, what was missing in this report screamed out at me as much as what it included.
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.
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.
ApexPeak, a Singapore-based nonbank capital provider, has been acquiring companies that facilitate supply chain finance and SME lending in emerging markets. Its’ most recent acquisition […]
There is an argument that banks are not making their SCF programs easy enough to implement. Paula Da Silva, SEB head of Working Capital, went […]
Technology vendors and procurement organizations often ask us about the steps banks are taking to deliver integrated purchase-to-pay (P2P) and related programs as part of their solution portfolios. The answer is actually a bit depressing: Most banks are doing surprisingly little today, and the programs they do offer in the trade financing area tend to rely loosely on technology at best. In fact, we can count the number of banks and their client-facing organizations with an in-depth knowledge of such solutions on a single hand. The sad part, of course, is that banks have a huge opportunity to participate in the new world of fintech – and have far better relationships to drive the adoption of solutions – not just their initial sale – within their current client base, especially the middle market.
Is it possible to quantify the risk of paying an invoice on receipt – before the usual approvals process? Remitia, an upstart in the trade financing and payables market, thinks so. In a blog post, originally published on PaymentEye, Remitia suggests it’s possible to use big data to accurately price the risk associated with paying an invoice on receipt. While pricing of payment risk for unapproved invoices is nothing new, the notion of quantifying and grouping different risks from historical payment and invoice files to determine the probability of whether a submitted invoice will be approved and paid without modification brings the concept into the big data era.
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.
Step back from the current craze around all the new financial technology solutions for companies to access cash, from e-procurement and e-invoicing solutions to marketplace lending and supply chain finance, and try and think about this from a logical basis – from the perspective of the supplier. You want to pay early. But by the time you figure out how to get it from all these solutions, you’ve logged into half a dozen or more solutions every day that are not directly integrated into your systems. You may even have to hire a few staff. Clearly, this is an area that deserves more attention, which suggests it might move to embracing a supplier-led ecosystem as well.
On Trade Financing Matters, I’ve been sharing a number of my thoughts in recent days LINK about some of the challenges and hurdles faced in driving greater adoption for third-party financing for invoice discounting and dynamic discounting, as well as some thoughts on what it will take to cross the chasm from corporate and treasury funded-programs. David Gustin, the managing director of Trade Financing Matters, could not sit still after reading what I had to say and decided to chime in himself. Below, I’ve featured a few of his thoughts on the challenges with non-bank funding for invoicing discounting and dynamic discounting models that leverage an approved invoice through an e-invoicing or supplier network connectivity service.