On November 12th, Aberdeen Group and Taulia co-presented a webinar focused around defining and understanding the true benefit of driving efficiency across the entire supply chain. The webinar highlighted some of the key factors which are shaping supply chain finance in today’s economic environment, where optimizing working capital is a top priority across many suppliers yet there is a need to keep buyers happy to ensure long-term relationships. We explored this fine balance through Aberdeen research findings and Taulia’s experience working with different customers. Some key challenges that companies face are in terms of managing paper-based documents, achieving operational efficiency, and ensuring financial visibility. During the webinar, Aberdeen showcased some of the leading strategies as well as capabilities to overcome these obstacles. Presenters made a very clear case why SCF relies on healthy compromise between the buyers and suppliers. Suppliers need frequent (even if in small amount) access to capital to facilitate production of goods and services and the buyers need to be incentivized in the form of dynamic discounting or some other ‘financing break’ to support suppliers. Other discussion topics focused on the current economic environment and how that’s guiding today’s investment decisions. One of the slides (slide 13) presented the interest rate trend, from January 1986, where interest rates were around 20% through January 2010, where reports are around 0.25 on Treasury-Bills (T-Bills). It was worthwhile for buyers to invest in T-Bills in 1986 but is not the case anymore. Therefore, many buyers are sitting on idle cash and prefer to realize incremental savings and in some cases even significant savings by working with suppliers to capture an early payment discount.
SCF can benefit both buyers and suppliers but it relies heavily on collaboration and communication. One way to accomplish that is through supplier enablement network; the success of which in turn depends on buyer efforts to get suppliers on-board. The onus is on the buyer to educate the supplier and encourage them to embrace best practices around eInvoicing for an optimal payment stream and overall financial visibility. However, one solution does not fit all, and SCF as well, as dynamic discounting is based on supplier-buyer dynamic.