Order to Cash and Dealer Networks

When most of us talk about supply chain finance, we tend to think of it in terms of some form of Buyer centric program which helps suppliers with some form of early payment (and potentially the buyer to extend his own terms).  That’s all fine and dandy, but there are some interesting opportunities emerging in the Dealer Network space.

Typical industries served by dealer financing include automotive finance operations, which are among the largest in the industry, but auto servicing operations, technology reseller programs, transportation firms (parts, tires), and there is an increasing interest in heavy machinery, food and beverage, and others.

Consider a Fortune 1000 auto manufacturer that has a dealer network and customers purchasing through a national account billing system.   The thing that is so important for these Fortune 1000 corporates with national and international dealer networks is making sure their local dealers and resellers have access to credit.

When their local dealer or reseller has transactions with their own customers (for example a customer purchases parts from a local dealer under a national account billing program, or a local reseller sells an AT&T solution) the dealer billing system can offer the electronic invoice processing functions (generation, pricing validation, presentment, etc).  but what makes this interesting is there are third parties that can use that service platform to intermediate and offer the following:

  1. pay the local dealer shortly after the invoice is transacted, minus a small percentage of face value.
  2. collect payment (for full face value) from the purchasing customer with the invoice coming due 30, or perhaps 60 days after generation.
  3. and third, offer a revolving line of credit for the local dealer to guarantee payment to the large corporate (H-P, AT&T, etc.) removing the credit risk from them.


This is a relatively unstudied area and one that has limited data.  There seems to be a growing interest in this space, but few software companies or networks are out there in the Order to Cash space.  It seems both Banks and companies like GE and Ally Financial offer bespoke solutions to their clients.

What do others hear in the market about this?  In particular, as Supplier Networks are to large Buyers and their suppliers, what software companies are facilitating the relationship between a large anchor seller (eg. AT&T), their resellers or dealers, and their customers?  There must be some interesting applications going on.

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First Voice

  1. Jordan Novak:

    This is, in fact, a huge part of what financial services firms consider “supply chain finance”. This particular financing arrangement has been around for around 50 years, starting as a way for Auto and Appliance dealers to finance inventory on the floor. Hence it became known as “Flooring”…since then it has made its way into several industries and can be called Distribution or Channel Finance. It is a huge money-maker for GE and many FI’s. Great business model and one that is growing at a high clip.

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