webinar scf - why should treasury sit in the driver’s seat
TRANSCRIPT
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Confidentiality
Supply Chain Finance: Why should treasury sit in the driver’s seat?
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Presenters
Tapani OksalaSolution Manager SCF
Tuomas UnholaHead of Financing Product Line
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Agenda
1
2
3
Supply Chain Finance from Treasury's point of view
Modern SCF-solutions cover multiple different business objectives
Cross-functional win-win-win situation
4 Q&A
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Supply Chain Finance is a “financing” program initiated by the buyer for it’s suppliers to
receive early payments.
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Fulfilling the needs of both buyer and seller
Supplier decides when to receive the payment
Early payment Existing term New term
Supply Chain Finance Program
Buyer negotiates extended payment terms
Early payment Pay later
Delivery Acceptance Payment
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Current environment
Strict RegulationsGlobalization Payment terms Interest rates
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Company’s goals
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Role of Treasury
Cash Forecasting
Working Capital Management
Cash Management
Funding and Capital Markets
Financial Risk Management
Stakeholder Relations
Treasury steering the way
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Modern SCF-solutions
Reverse Factoring Dynamic Discounting Cash flow, working capital, impact on balance sheet
Margins, investment opportunity, impact on profit & loss statement
Extended payment terms, while offering early payments to suppliers
Early payment discounts to suppliers
Approximately 1-4% per annum
Approximately 5-30% per annum
Third party funder (banks, non-bank funders)
Buyer’s balance sheet
Large and medium enterprises Small and medium enterprises (SME’s)
CORPORATE GOAL
HOW
AVERAGE DISCOUNT
FUNDING SOURCE
SUPPLIER FOCUS
Reverse Factoring and Dynamic discounting in same solution• Flexibility to utilize both solutions as business needs may change
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Modern SCF-solutions
• No Restriction on number of Funders– Self funding– Fund based funding– Bank funding
• Liquidity sustainability– New funders for liquidity shortfalls
• Minimum impact on credit capacity• Competitive margins
Multi-Funder setupAs easy to connect to multiple Financial institutions as to one bank
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Modern SCF-solutions
• Regional funders• Multi currency support• No geographical limitations• Support for different time zones • No restriction on number of suppliers
Global reachGlobal supply chains, maximum number of suppliers on board
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Modern SCF-solutions
• Streamlined supplier onboarding• Optimized payment term extensions• Optimal supplier selection• Cash flow predictions• Ideal margins for early payment discounts
Toolkit for successful SCF programWorking Capital affect is realized after the payment term negotiations
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Cross-functional win-win-win situation Cooperation between all key stakeholders
Finance
Treasury
Procurement
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Head of treasuryEnsure adequate funding
• Improve working capital & cash flow
• Options to provide “income stream”
• Multiple funding options
• Bank strategy – Non bank financing
• No liquidity shortfalls
• Risk management
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CPOEnsure purchase continuity
• Extend payment terms
• Savings and cost avoidance
• Increases the value of Purchasing
organization
• Reduced supplier (supply chain) risk
• Social responsibility & Innovations
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CFOEnsure business continuity
• Working Capital effect
• Discounts from the purchase prices
• Bringing Procurement and Finance
closer to each other
• Streamlined Purchase to Pay
process
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Summary
1. Supply Chain Finance has many touchpoints to Treasury's daily tasks
2. Modern technology will provide a toolkit which solves multiple different needs
3. Leads to Cross-functional win-win-win situation
Start talking to other departments now
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Sell More Pay SmarterBuy Easier
Setting OpusCapita apart