Supplier Onboarding for Trade Financing: Why Partnering Makes Sense

In our view, the vast majority of domestic companies should outsource significant parts of the supplier onboarding and enablement program to partners, just as they outsource payroll. Said in a less technical way: Don’t be foolish and do this internally, at least not within a corporate or business unit setting (shared services can theoretically work).

There are technical (data collection, integrity, data connectivity, etc.) and non-technical (speed to adoption, the fact most A/P organizations are not exactly filled with “sales” experts that can persuade suppliers to adopt a program, etc.) reasons not to tackle the challenge yourself. Process nuances also factor into why partners are critical.

For example, as David Gustin notes in a Trade Financing Matters research paper, “If a supplier is interested in an early payment program, the [supplier enablement] back office may have to do basic or more advanced verifications depending on the nature of the program. For example, if this is a simple early pay dynamic discounting program, it is more straightforward then if a true receivable purchase agreement is involved. The verification process includes verifying name, DBA, address, telephone, corporate status, etc.”

Further, “It may also include contacting key counterparty contacts (finance, procurement contact) by phone and add more references from to a master file. Then there are the public records information (liens, judgments, bankruptcies), especially if these are receivables being purchased (e.g., reverse factoring programs). Upon receipt of signed documents, the back office would generate a supplier UCC search & perform an UCC filing (note: this is for U.S. suppliers). Offshore suppliers would have different requirements.”

Does this sound like something that your AP organization is ready to take on? In most cases, we know the answer before even asking it!

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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