In this blog, VP of Marketing, Matthew Stammers, recaps on the 4 key lessons learned from last month's webinar about working capital improvement solutions and how forward-thinking businesses stay on top of the game.
Whether you’re a new, growing, or established business, working capital is crucial. Even more so in today’s digital economy – where every business requires funds to invest in new technology, so they can gain a competitive edge in a crowded marketplace.
To stay ahead of the competition, businesses are looking towards working capital solutions for new ways to liberate their cash and fuel investment - such as technology-enabled supply chain finance and dynamic discounting. But are these supplier financing programs a viable solution for your business and suppliers? And most importantly of all, are they actually worth it?
Earlier this month, my colleagues and I held a webinar about how our customers are driving success in their own working capital improvement programs and what businesses, like yours, can do to replicate their success. I’d recommend you scrolling to the bottom of the page to listen to the whole thing. But if you’re short on time, I’ve rounded up the key takeaways for you below.
1. Your suppliers have more flexibility than ever before
When considering a new working capital solution, not only do you need to think about boosting your own cash flow, but you also need to think about providing a flexible solution for all of your suppliers. Trust me, it’ll pay off in the end when you’re lapping up the benefits of a financially robust supply chain and a greater certainty of supply.
Giving your suppliers the flexibility to receive cash when they need it allows them to pay their staff, produce more stock and invest in new technology - basically everything a business needs to survive and grow. With programs such as supply chain finance and dynamic discounting, your suppliers now have the opportunity to receive early payment as close to the invoice approval date as possible.
“With a program such as supply chain finance, you’re putting the control in the hands of suppliers to have that early payment discount as close to the invoice approval date as possible.”
Jasmine Stephenson, Supplier Enablement Director
2. Artificial intelligence is reshaping the future of finance
From recommending movies to developing driverless cars, the power of artificial intelligence is unparalleled and it’s changing the way businesses manage their supply chain. No longer are working capital projects difficult to track and analyze. They now use artificial intelligence to automate processes, like offering early payment terms, and the program’s success can be tracked within a few simple clicks.
With that being said, when choosing a working capital solution it’s crucial to pick a provider who understands the capabilities of artificial intelligence and unleashes its power. As CTO of Taulia Brady Cale says, thanks to the tools now available (Taulia being one of them) supply chain finance is easy - even at the end of a long, busy week.
“In the past, working capital projects would last 2 to 3 years, and they’d be very difficult to track and analyze at the same time. Now with the tools that are available, Taulia being one of them, it’s very easy to do supply chain finance on a Friday!”
Brady Cale, Chief Technology Officer
3. A well-planned supplier onboarding strategy is key to success
At the end of the day, you will only succeed in implementing an effective working capital improvement program if your suppliers are on board with you. But what does an effective onboarding strategy look like? How do you replicate success?
Firstly, one of the golden rules in onboarding is that suppliers won’t onboard themselves. Sure, you’ve sent out an email to all 5,000 of your suppliers telling them about the new program, but that doesn’t necessarily mean they’ll instantly buy into your program. Some of them might not even have an email address.
To make sure your suppliers do buy into your new program, you must create a clear plan and communicate your proposition clearly and effectively. Also, make sure you’re armed with a number of different outreach strategies and a pragmatic approach for suppliers who aren’t interested in change. But, most importantly of all, just be clear in communicating a) how the new program will benefit them and b) how easy it is to get up and running.
“Supplier communications are just so critical to the success of the program and it’s so important to communicate to the supplier base in a way they understand, not in a way that confuses them.”
Jasmine Stephenson, Supplier Enablement Director
4. Supplier financing programs are worth it (if executed properly)
The cost of borrowing is incredible low today and, particularly if you’re an investment grade rated company, it’s very easy to borrow large amounts of cash. So, why would you want to adopt a working capital improvement program in the first place? Is it ever going to be worth it?
The first thing to note is that implementing a program has a multitude of benefits. One of them being the fact that you can offer suppliers (both mid-tail and long-tail) access to accelerated cash flows. Another one being the fact that you can provide suppliers with a cheaper cost of cash and payment certainty - strengthening the supply chain.
“There’s tons of money to be had in your supply chain and we’ve had lots of customers who have been able to extract hundreds of millions of dollars.”
Kjel Christensen, Senior Enterprise Account Executive
But on the flip side, to reap the full rewards of a supplier financing program, you must choose a solutions provider who truly understands your working capital needs - and has the right technology and know-how to make sure your program succeeds.
So, in summary, supplier financing programs are totally worth it. You can free up millions of cash in the supply chain, build fruitful long-term trading relationships with your suppliers, and create a healthier financial supply chain. However, just make sure you do your homework and pick the right one.
Thank you to everyone who took part in the webinar and to everyone who asked a question at the end. I speak on behalf of the team when I say we loved sharing our insights and knowledge on working capital with you. For those who didn’t get the chance to join us and crave a little more, the webinar is available for you to watch. Simply follow the link below and you’ll be able to see the full webinar in all its glory.