Supplier Enablement For Supply Chain Finance and Invoice Discounting

Given where most procurement and A/P organizations stand in terms of supplier enablement and data quality for existing P2P programs (see our coverage of the topic from recent posts here, here and here), we can safely assume existing onboarding efforts and vendor data files won’t cut it for trade financing and invoice discounting/supply chain finance programs, in particular. This means that we should not necessarily focus as much on extending previous programs – unless they are truly comprehensive – as much as starting anew.

Perhaps even more important in SCF and discounting programs: the definition of onboarding is significantly expanded, and gathering and managing supplier information is only part of the overall effort. There are many elements of this (which we’ll explore in the next post in this series) including supplier segmentation efforts to tier the supply based into logical groupings for targeting – by size, willingness to take a discount, APR rate, risk, geography, industry, diversity status, etc. In certain cases, a third-party (e.g., Tungsten) may do elements of this for us if they are in charge of the financing component and rate. In other cases, the procurement and A/P organizations may need to own it.

At Spend Matters and Trade Financing Matters we have found ourselves in rooms with clients who are internally arguing over the semantics of what supplier onboarding actually is. Those 
with a P2P and supply chain background see it as a compliance and master data management exercise. Those with a financing orientation think of it as much as a sales process as a compliance process. Even though we can agree to disagree among ourselves on the broader question, there’s little debate from a pure trade financing perspective as to what comprises the overall supplier enablement effort. This is what we’ll examine as our analysis continues.

This post was based in part on content in the Spend Matters Perspective, Supplier Enablement for Invoice Discounting and Supply Chain Finance: Background, Tips, and Secrets for Success. In this research brief, Jason Busch and David Gustin explore the history and future of supplier enablement, centering not only on P2P processes, but also onboarding for trade financing (e.g., supply chain finance, invoice discounting, etc.) initiatives.

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