Every organization strives to lower operating costs while increasing value.
For multinational companies, this can be tough when faced with increasing regulatory compliance, global competition, and shifts in customer demand and material costs. In addition, the range of suppliers is expanding, adding new complexities to the supply chain.
So why is it that big businesses still continue to practice the outdated, cash-management strategy of “quick to collect, slow to pay”? A recent American Express small business survey revealed that more than half of small businesses are waiting between a month and two months to get paid for their goods. These payment terms can create tension, disruption, and instability in your supply chain.
Luckily, there are advanced technological solutions and services out there to ease the strains of these B2B transactions.
A newly released whitepaper and webinar by The NeuGroup, a leading treasury advisory firm, explain how supplier financing can connect thousands of businesses worldwide, enabling organizations of all sizes to achieve real-time electronic exchange of information across the entire procure-to-pay chain.
Supplier financing solutions, such as dynamic discounting, aim to make the transaction work for everyone—buyers can save through discount capture and suppliers can get paid when they need cash, eliminating the need to turn to high interest loans or factoring.
Simply put, it just makes sense.
Current MNC’s are idly sitting on billions of dollars with few low-risk places to invest where it will return decent yields. They could be paying a little earlier and paying less for huge savings, thus making their money much more valuable. The report notes that companies that pay early, say 10 or 20 or 30 days, and get a one or two percent discount from suppliers, could be making high-single or double-digit returns on their money. And beyond being profitable, it’s a great exercise of corporate social responsibility.
Daniel Pfeiffer, head of Supply Chain Finance at Taulia explains, “the logic is, what is your cash doing that’s earning a rate equivalent to the 10 percent or 20 percent a year it could be earning with dynamic discounting?”
Download the report and watch the webinar to learn how forward-thinking finance professionals are injecting technology into their supply chains to achieve greater efficiencies and cost savings. It just might make supplier financing a top priority for you this year.