optimising working capital in a digital world · *source: ardent partners - the state of epayables...
TRANSCRIPT
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Optimising Working Capital in a digital world
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David Reidy • Financial Services Consultant
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Agenda topics
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❏ The global challenge
setting the scene
❏ The future
what part will blockchain play?
❏ The focus
supplier financing
❏ The corporate challenges
reasons for change
❏ The present
options available TODAY and how digitisation supports success
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Global economic growth hinges on efficient crossborder trade
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$1.5 trillion trade finance gap
4
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Technology is the answerNew technologies enable the digitisation of trade
5 Source: Bain & Company
Optical
Character
Recognition
(OCR)
Robotic
Process
Automation
(RPA)
Advanced
Analytics
(AA)
Artificial
Intelligence
(AI)
Electronic
Invoicing
Internet of
Things
(IOT)Distributed
Ledger
Technology
(DLT)
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In the last 15 years, 52% of the Fortune 500 companies
have disappeared.
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1955:
75 years life expectancy
2016:
15 years life expectancy
(and falling...)
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Payables/Supplier FinancingUnlocking Working Capital in the supply chain
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DPODays Payable Outstanding
DSODays Sales Outstanding
DIODays Inventory Outstanding
CCCCash Conversion Cycle
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payment term
Day 60Value
Supplierinvoices
1
Buyer approves
2
Working Capital Optimisation -Supplier Financing
Buyer pays
3
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Top Finance Pressures• Digitize and improve efficiency in cross-company processes
• Optimize working capital and realize value tied in the supply chain
• Enhance visibility and control across the supply chain organization
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• Stretching DPO levels increases supplier risks
• Slow invoice processing limits working capital opportunities
• Suppliers who need working capital don’t have access
• Low returns on short-term cash investments
• Limited supplier participation in financing programs
Are current working capital practices effective?
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Broken Supply Chain ProcessesSiloed organizations and disconnected suppliers create network challenges
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Procure-ment
Accounts Payable
Treasury
Suppliers
End Users
*source: Ardent Partners - The State of ePayables 2018
The average organization gets electronic invoices from less than 25% of their
suppliers. *
Only 12% of potential early payment discounts captured. *
24% of AP time is spent working with suppliers to fix invoice, processing and
payment errors.*
Most supply-chain payment processes include 10+ tools, with typical
end-to-end digitalization below 20%
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Optimize
Payables
Real-time
Insights
Build Your
Network
Electronic Invoicing
Legal Country Compliance
Document Firewall
Multi-way Matching
Approval Workflow
Collaboration
Task Manager
Automate
Payables
Supplier Onboarding
Network Manager
Supplier Profiles
Surveys
Buyer Managed Upload
Insights Center
Data Connector Apps
Supply Chain Finance
Dynamic Discounting
Virtual Cards for Invoice Payment
Tradeshift Cash
Tradeshift® Pay: Key CapabilitiesThe connected solution for supply chain payments
An
nu
al S
pe
nd
High Value and Strategic Suppliers
$$
$$
SCF
Lower Value Long Tail Suppliers
Execution gap
Execution gap
VCDD Execution gap
Early Payment ProgramsDigital supply chains maximise results
Supply Chain FinanceImproves your working capital performance
Dynamic DiscountingGenerate returns from excess cash
Virtual Card for Invoice Payments
Simplifies your long tail payments
Global coverage
Multi-bank
One wallet for everything
● Lengthen payment terms with suppliers● Bank settles supplier upon invoice approval ● Classified as an extension of the buyer’s accounts
payable, not debt● Suppliers access cash flow at favourable rates● Buyer optimizes working capital and supplier generates
additional operating cash flow.
● Negotiate early payment discount with suppliers● Automated discount calculation and management● Generate significant savings / Reduce COGS ● Earn 7-20% APR on short-term cash investment● Support supplier’s cash flow requirements
Bring your own bank +
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Get the most from your early payment programs
Low supplier participation
High supplier participation
Fast invoice processing
Slow invoice processing
Maximizedworking capital
benefit
Only 12% ofearly payment opportunities captured. *
*source: Ardent Partners - The State of ePayables 2018
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The digital network creates opportunities for everyone
Seller
ProcurementAccounts Payable
Seller
Bank
Bank
Treasury
Seller
● Pay suppliers in time
● Reduce supplier queries
● Enhanced working capital
● Risk free, higher returns on
cash
● Flexible finance options
● Lower supply chain risks
● Capture more discounts
● Stronger supplier
relationships
● Faster access to cash
● Complete visibility of invoice
status
● Larger lending programs
● Customer retention
● Enhanced data for better
credit decisions
