Trade Financing Matters Content

Join David Gustin at Exchange Summit 2015 in Barcelona

exchange summit

I have spoken at many conferences over the years, and people ask all the time what conferences to attend. The answer is always the same – it depends. A conference like Lendit can draw 2,500 people today, given the hysteria with all things fintech. Traditional lending conferences, however, struggle to get 1,000 at their annual events. I find some of the best conferences come when the material is focused and flows – they don’t try to cover the world. Instead, they come at it from a practitioner's point of view and minimize the number of consultants giving presentations.

The latter approach will be on display at Exchange Summit 2015, at which I’ve been invited to give one of the keynotes. Given the expectations and sophistication of the audience, the pressure will be on to deliver insights that matter.

Tradeshift to Provide App for Working Capital through C2FO Partnership

Supplier collaboration platform Tradeshift hasn't been well known for finance outside of accounts payable. It has offered dynamic discounting, to be sure, but the feature has been used by only a handful of clients. That approach is about to change, however, as explained in a breaking article on Trade Financing Matters. As of Tuesday, Tradeshift will partner with C2FO, giving it access to the financial technology company's working capital market as an internal app. It’s clever on the surface, analyst David Gustin and Xavier Olivera explain, but how will the partnership work in practice?

Demica’s Three Core Supply Chain Finance Solutions

Demica is owned by J.M. Huber, a diversified multi-billion dollar family-owned company headquartered in the U.S. with operations and staff located globally. I had to ask what a company of this size is doing owning a vendor in the supply chain finance market. After all, J.M. Huber is a diversified multi-national company dealing with engineered materials and natural resources. Huber established a financial services division in 1997 and started working with Demica in 2001. In 2002, they acquired the platform. But just what does Demica do? Their three core products are focused on supporting supply chain finance, invoice discounting, and trade receivables securitization.

So You Need a Supply Chain Finance Platform — What You Need to Know

Supply chain finance is a very broad category as some define it. But we look at it as something very specific, typically centered on a solution that enables suppliers/ vendors to sell their invoices “approved” for payment by their buyer before the payment due date. Still, hold that thought for a moment and consider the broader landscape – as well as how these tools must interact with a technology ecosystem that already exists. Looked at from this perspective, purchase-to-pay (P2P) technologies to support early payment functionality for your suppliers can come from several different sources.

The State of Supply Chain Finance Programs: Seven Quick Facts

I recently had a few discussions with corporates who have rolled out Supply Chain Finance (or Approved Trade Payable) programs with their supplier base. These corporates have been running programs for several years so I thought it would be good to get some feedback on how the programs are progressing. Here are seven quick facts that seem to be consistent with programs.

Banks and Supply Chain Finance Technology Deployment

Many banks are trying to figure out how to provide supply chain finance capabilities to their clients and what technologies they need to support their infrastructure. Trade is now becoming just another specialized lending product at banks, and leading banks are trying to figure out how to integrate trade finance with their factoring, commercial finance, asset based lending, invoice discounting and other bank lending areas.

Breaking Down the Accounting behind Receivables

Since the Enron and WorldCom crisis when independent auditor Arthur Anderson failed to report illegal accounting practices, the SEC has been monitoring public corporations more closely. Thus, we all should have some basic knowledge of accounting, especially as the interest in financing trade receivables by third parties is as high as ever. More than ever Receivables are being used to raise cash. When you think of a sale, it’s pretty simple: Debit “accounts receivable” and credit “credit sale."

Do Suppliers Push Back on Dynamic Discounting and P-Card Programs?

Do you see suppliers fighting back by raising prices when buyers use dynamic discounting or p-cards to settle more traditional supply chain spend? I hear that comment from Procurement officers sometimes, but there really is no data anywhere that I can find. Both dynamic discounting and p-card programs charge high annualized percentage rates. In the case of p-cards, the business model of interchange must support both the merchant and issuing card member bank. In dynamic discounting, it's a risk free return for treasury. These high rates beg the question regarding when suppliers will just swallow the interchange in order to keep the customer and when they will push back (including refusing to accept a p-card in the first place).

Where is Orbian Now?

Orbian was one of the first companies to really start the ball rolling with supply chain finance. It was conceived and developed in the late 1990’s as a joint venture between SAP and Citibank and became independent a few years later. Orbian’s sole focus is to provide a supply chain finance working capital solution for corporates. Orbian’s SCF model was built to provide an agnostic funding model to large corporations and their suppliers, in essence eliminating the dependency on single bank funded programs. Their stated objective is to create the lowest cost, greatest capacity and greatest security of liquidity upon which the buyer’s working capital goals can be achieved.

Ask the Expert: B2B Commerce Networks Enter the Supply Chain Finance Space [Plus+]

Ask the Expert is back! In the last few months, there have been several announcements that companies are attempting to bridge the financing/banking and eProcurement, e-invoicing, purchase-to-pay, and supplier network worlds - Mastercard/Basware, Tungsten/OB10, Tradeshift/CapitalAid, Ariba/Discover, and Taulia with Citibank to name a few. These networks think they’re onto something big. What are these partnerships thinking, and how will they impact the traditional trade product sets – bank lines, factoring, invoice discounting, etc.? Join David Gustin (of Trade Financing Matters) this Thursday, April 10 from 10-10:30am Central for B2B Commerce Networks Enter the Supply Chain Space.

A Trade Financing Matters Post Round-Up for the Spend Matters Crowd

Our newest sister site Trade Financing Matters had its official launch not too long ago, but it is in fact over a month old, with the inaugural post having been published on December 30, 2013. Since then, a number of posts have followed, pertaining to trade credit under the two main categories of payable-centric and receivable-centric solutions. Here’s a round-up of posts that may be of interest particularly to Spend Matters readers.