Webinar: How to implement a working capital mandate with your supplier ecosystem

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As many companies, especially smaller ones, face liquidity challenges during their Covid-19 recovery journey, buying organizations are looking for ways to offer their suppliers early-pay finance schemes to alleviate cash flow difficulties. Supporting the supply base to sustain a continuous and seamless trading cycle has become essential for growth, business continuity and innovation, for both parties.

However, for many organizations, finding the right approach poses some difficult questions, and it’s often hard to know where to start.

Fortunately, the market for early-pay finance solutions has matured, and there are a number of different solutions for corporations to consider to support their suppliers with invoice payment before the contracted due date.

To help organizations understand available early-pay options, assess their current spend constraints, evaluate programs, set the right senior management expectations and get answers to the initial questions that are essential to get right, Spend Matters will be hosting an online discussion on June 30 with Amarish Kapadia, VP of Sales - Supply Chain Finance, and Vikas Shah, SVP of Supply Chain Finance from working capital solutions experts LSQ. They will be joined by Spend Matters contributor David Gustin, President of Global Business Intelligence.

Amarish has global experience in supply chain management and procuring direct and indirect material and services in the Automotive and Aerospace industries. Vikas leads the go-to-market strategy, sales, marketing and supplier success teams to drive the adoption of LSQ's working capital financing platform.

David is a deep expert in financial supply chain management, with many years of experience advising corporates, vendors and financial institutions on supply chain finance, B2B payments, supplier market intelligence, trade credit and more. We talked to him about the importance of the working capital discussion at this time.

Working capital — why so complex?

“Firms have several options for early invoice payment,” he told us. “They may decide to use their own surplus corporate cash, debt lines or third-party cash to fund suppliers early. Some of these techniques focus more on the tail spend, such as virtual cards, while others can facilitate the entire supplier ecosystem if need be, such as marketplace auctions or dynamic discounting.

“A company’s goals for implementing early-pay programs across their supply base could touch the balance sheet, income statement, or even ESG and diversity goals.  Providing options for the entire supply base sounds simple, but underneath there is inherent complexity.  Evaluating opportunities with supplier finance techniques starts first with understanding the complexity around the company’s current baseline of technology, spend categories, legacy procurement contracts, and their mix of current early-pay programs implemented.”

So in the webinar, our experts will offer advice on where to begin in the evaluation process.

Why is it so important now to get it right?

“While a mandate to offer ALL suppliers early-payment options seems like a public good, the purpose of trade credit is to facilitate sales for both the buyer and supplier.  As part of this decision process, companies need to think in terms of goals they are trying to achieve, alignment within their organization, external alignment, and bank versus non-bank solutions.

“Simply pushing terms out and offering early-payment to some or many suppliers may not be a perceived benefit for them in terms of financial health (for example, they may not want to discount given tight margins) and may in fact be in excess of fair or optimal payment terms.  It may be the desire to use surplus treasury cash to achieve discount income may result in suppliers having access to early-pay discounts that are considered expensive relative to other options.”

Our experts will also outline the questions that organizations really need to consider early on.

What’s holding organizations back from offering early-pay finance options?

“Clear goals, organizational will, and stakeholder alignment are critical in developing an early -mandate for ALL suppliers. You need the Three Amigos – Procurement, Treasury and Shared Services — all working together to drive programs. Many times the KPIs and company incentives aren’t there, holding back the organization from going beyond their existing status quo.”

So if you need help in understanding the landscape of supply chain financing better, have questions about how to get started and what you need to consider for your organization and your supply base, join us on June 30 at 2pm Eastern to discover:

  • How to assess your current constraints and legacy environment to evaluate programs
  • How to evaluate addressable spend and early pay options
  • What key strategic questions must you get right from the beginning
  • How to get to a decision and set management expectations

LSQ will also be imparting learnings from a recent customer case study.

We hope you can join us. Register here for the June 30 webinar at 2pm US Eastern time.

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