5 steps for scaling supplier finance and strengthening your supply chain

Supply chain health has always been of critical importance. As the value of a robust supply chain has grown in estimation, so too have methods of making it so. For decades, supplier finance was available only to the largest companies, with programs developed and administered by banks. It’s just recently, with the innovations brought to market by fintech businesses like Taulia, that companies have had access to the technology and resources to scale supplier finance to their entire supply chains.

Supplier finance, like any cross-functional strategic initiative, requires strong analysis, robust planning, clear objectives and great partnership. Taulia has developed a framework so you can provide liquidity and strengthen your entire supply chain.

Step One: Planning

Improving the health of a supply chain is something of a nebulous aim. It’s important then, when considering a supplier finance program, to be clear about the objectives of your project. What are you trying to achieve? How will you measure success?

The answer is simple: Model the scenarios to test the expected outcomes. A robust modeling process will provide you with a practical decision-making path to ensure your objectives are aligned toward success.

Step Two: Tools and Resources

Internally, your working capital advisory team should ideally include stakeholders from procurement, finance, treasury, accounts payable and IT. This team will set objectives, select providers and execute the strategy.

If your goals include addressing aspects of your entire supply chain, it is imperative to select external tools that ensure scalability. That’s where the choice of technology comes in.

Technology requires initiative. Taulia has implemented over 100 working capital programs with some of the largest companies in the world and has a network with over 2 million suppliers in countries on every continent.

Step Three: Strategic Preparation

With objectives defined, organizations aligned and resources identified, it’s time to get to work. The best programs are led by people or teams that have an accurate picture of their financial supply chain, which includes an understanding about supplier relationships.

Supplier segmentation analysis can involve numerous considerations, but common ones include supplier relationship, strategic importance, geography/region, IT landscape, supplier size, contractual restrictions, ESG programs and regulatory restrictions.

By developing a 360-degree approach to your suppliers you are better-placed to design and implement the proper strategy on a supplier-by-supplier basis. Careful planning will allow a quicker ramp, ensuring speed to value.

Step Four: Operational Readiness

Now that you’ve developed a strategy and a framework, you need to get the internal organizations aligned and ready. At this point, it’s important that everyone has clear ownership and understanding of their roles and responsibilities. It’s also important to know who in leadership takes ownership for reporting and the cadence.

Step Five: Execution and Growth

Supplier finance is a fast-evolving business, and there are constant needs to tweak, adjust and realign the strategy to ensure you’re meeting the objectives of both your business and your suppliers. After the first 90 days of your program’s launch, it’s important to develop a growth mindset around the program. At this point, significant traction and progress has been made, but it’s important to have the teams and tools around you to ensure the program continues to deliver success.

You’re not alone

Supplier finance, like any cross-functional strategic initiative, requires strong analysis, robust planning, clear objectives and great partnership in order to be successful. When assessing all these requirements and complex considerations at the start, it can seem overwhelming and difficult to know where to begin, but rest assured you’re not alone.

Read Taulia’s detailed guide on scaling supplier finance and discover where to begin.