Tips of the Financial Supply Chain Trade: Taulia’s New CEO Talks with Spend Matters

Spend Matters recently had the chance to ask Cedric Bru, the new CEO of Saas financial tech vendor Taulia, some questions about his new role and his views on both the company and the current market. We began this Q&A series yesterday (make sure to check out Part 1). Today we continue our conversation with Cedric, in which we discuss financing and more. Also, stay tuned for our final post on this series tomorrow.

Spend Matters: What happens to programs when we move away from essentially a zero interest rate environment? Good news or bad for trade financing penetration?

Cedric Bru: When we move away from essentially a zero interest rate environment, there will be extra pressure on businesses, particularly SMEs, to fund their operations. Many lenders base their offering on the credit quality or risk of suppliers. Lending rates will significantly increase and their capacity to lend will sharply decrease.

Taulia's early payment programs are funded either by buyers or third-party financiers that base their offering on the credit quality and risk of buyers. In a period of high interest rates or a period of financial crisis, there is a strong incentive for buyers to stabilize their supplier chain and help their critical suppliers avoid bankruptcy or financial hardship. In addition, institutions develop an increased appetite for commercial paper from large credit-grade companies, and are willing to participate into buyer-based programs. The value buyers and suppliers receive from Taulia increases during these times.

SM: What do you think the limits are of self-funding and corporate balance-sheet-based financing of programs? Do you think this is ultimately a third-party financing game once programs scale to a certain level?

CB: Ultimately, corporations need flexibility. We – as consumers – make different payment and financing decisions throughout our lives based on how strong our bank accounts are, the market and other dynamics. Corporates are different, but they still need the same flexibility. There can be times when self-funding is the best decision. There can be times when they need to build their balance sheet and want to utilize on third-party financing.

The key is to ensure that suppliers enjoy the same experience and can always rely on a strong source of working capital, either funded by the buyer or a third-party financing entity.

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