Supply Chain Finance at eWorld – the past and the future

At the recent eWorld event, the panel discussion on Supply Chain Finance was one of the highlights, with some illuminating discussion. It was chaired by Sandy Kemper, CEO of C2FO (sweatshirt and jeans), and also featured Mark Perera of Procurement Leaders and Old Street Labs fame (jacket but no tie), Rene Chinnery, Head of Supply Chain Finance (SCF) from Lloyds Bank (suit and tie), and Tim Armstrong from KPMG.

I felt sorry for Chinnery actually – talk about the lamb to the slaughter. He made his points well, but it is hard to see that the traditional banks will have any significant role in the new world of supply chain finance. They don’t have the technology, they don’t have the innovation, and their cost structures suggest they are unlikely to provide finance at competitive rates once the market for sources of finance expands and becomes more competitive.

Take Kemper’s business, C2FO. I had never heard of them before eWorld, to be honest. But they claim to be the “world’s market for working capital.” Their platform links organisations with surplus cash with those who need cash (working capital) and are prepared to pay for that funding. In a sense, invoices and early payment against those invoices are  just a vehicle for matching up (and providing security) for those “buyers and sellers” of cash.

We’ll feature more on that firm shortly I hope, but they’re not the only game in town. Tungsten seen to be going well in terms of signing up some huge firms for e-invoicing with their SCF offering to follow. Crossflow Payments are the low-key but potentially powerful dark horse in town; and based on Jason Busch’s reports from their conference, Taulia are becoming a serious player here. And what about Tradeshift? Or Oxygen Finance? All of these firms can probably offer more than the traditional banks, as they link e-invoicing to technology-enabled dynamic discounting and SCF.

Anyway, back to the panel. I asked the KPMG guy whether they had carried out a full analysis of options before choosing C2FO as their SCF partner – yes, was the answer. But personally, as a CPO, I would still want to look at the options if I was choosing a SCF platform. Would I go with one just because KPMG told me to, even if I loved them deeply as my favourite consultants? No, I wouldn’t. That’s not to criticise KPMG or to say C2FO isn’t the best choice; I would just want to be sure for myself, given the range of interesting options we now see.

All fascinating stuff, and I could have done with twice as long for the eWorld discussion on this topic. As we’ve said before, this is an area senior procurement executives need to be looking at, if you haven’t done so already. Get on the front foot, and take the credit for the undoubted benefits you can realise before your colleagues in Finance claim ownership!

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  1. Derek Lancaster:

    I can see that where there is tight control over pricing, discounts for early payment might work, otherwise why wouldn’t a supplier simply build the cost into their price in the first place? In a largely service environment I can’t see that savings can really be delivered and may well be dangerously illusory!
    Or am I missing something?!

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