Exploring why Ariba and the ReceivableExchange relationship failed

Ariba established a working relationship with theReceivablesExchange (”TRE”) back in 2008.

The goal was to bring Ariba’s vendors onto the TRE platform to make it as easy as possible for these vendors to access a source of liquidity for their invoices.

When you think about the number of companies Ariba has supplying invoices into their network, this relationship made obvious sense.  But the real reason why this was exciting was the fact that transactions done via the Ariba Network provide a solution to the single most significant weakness with an invoice, i.e. the invoice verification process.

Prior to an Ariba Network invoice being posted for sale on the TRE auction, the suppliers customer (or Account Debtor) had to acknowledge three things:

  1. that the goods or services have been provided appropriately,
  2. that the invoice properly reflects the amount due,
  3. that the payment terms are accurate and that payment will be made in accordance with the terms.


That is the strongest affirmation of invoice validity available to an investor wishing to buy that invoice.

Why did this never take off when your gut says, "Here is the largest network matching the first auction platform that had investors hungry for yield. A can't lose proposition!"? Of course, there’s never a guarantee of success but the odds were good.

Was this a case of marketing failure?  Was it a case that the cost savings from having reduced the cost of prospecting from a large identified pool of seller invoices never benefited the seller?

Many third parties want to finance invoices coming from supplier networks.  The demand for financing must be there. In the Ariba/TRE case, it was not.  It was unfortunate for all, as this was clearly a case of a win (seller), win (investor) and win (Ariba/TRE).

With more and more third parties tapping into supplier and B2B networks, maybe the time has finally come.

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