Trade Financing and P2P Technology: How Can Banks Get Smart on Technology and New Client Solutions?

Technology vendors and procurement organizations often ask us about the steps banks are taking to deliver integrated purchase-to-pay (P2P) and related programs as part of their solution portfolios. The answer is actually a bit depressing: Most banks are doing surprisingly little today, and the programs they do offer in the trade financing area tend to rely loosely on technology at best. In fact, we can count the number of banks and their client-facing organizations with an in-depth knowledge of such solutions on a single hand. The sad part, of course, is that banks have a huge opportunity to participate in the new world of fintech – and have far better relationships to drive the adoption of solutions – not just their initial sale – within their current client base, especially the middle market.

Basware: In the Opinion of ‘The Emperor’

I recently shared some quick thoughts on the evolution of Basware, a provider that is arguably making a complicated set of transitions, perhaps even more complex than what Ariba went through as it morphed from an enterprise software company to a cloud- and network-based purchase-to-pay (P2P) vendor, before SAP acquired it. But I would be remiss in commenting on Basware without referring Trade Financing Matters readers to a great post, Basware = Sciquest + Tungsten?, by my old frenemy, Bob Solomon. Bob’s got a heart of gold, but he’s also the one who came up with the Ariba network pricing model while running the Ariba network business – which practically makes him the equivalent of a Sith lord.

Figuring Out Basware in the P2P and Trade Financing Equation

Cloud P2P

Basware doesn’t enjoy sitting still. When I first dove into the provider in the early days of Spend Matters, it was deeply rooted in the enterprise software business with arguably the strongest accounts payable automation capability, as well as e-invoicing, limited e-procurement and even core financials, which is where it began serving the needs of Nordic companies. The company appears to be making greater strides in its cloud offerings in recent quarters as the product set has matured, but the big question is whether Basware’s P2P, e-invoicing and supplier network capability is just a Trojan horse for a new business model built on financing.

Beyond the Invoice: Ruminations on the Future of Document-Triggered Financing

Late last year, David Gustin penned probably the best white paper on the future of trade financing. In his analysis, David argues that there are 6 specific triggers for potential intermediated or early payment: signed contracts, the issuance of a purchase order (PO), materials ordered by suppliers, shipping status, invoice issuance and invoice approval. From a traditional indirect or even direct materials procurement scenario, these steps make complete sense as potential financing triggers, and they are certainly triggers for payment in the offline factoring world today. But if you open your mind a bit to other potential triggers in different areas and scenarios, the prospects become quite interesting indeed.