An evolution in Supply Chain Finance is here: Why it matters to CFOs and Treasurers

December 9, 2014 Matthew Stammers


Software as a Service (SaaS) has been disrupting just about every area of our professional lives, from CRMs and ERPs to HRMs.

In the past couple of years, supply chain finance (or supplier finance, in the U.S.) has become one of these areas affected by technology disruption. What has traditionally been a bank-led supply chain finance marketplace is now opening up to a new generation of SaaS led technology platforms.

So why is this technology change from an on-premise solution to a cloud, or SaaS, solution disrupting the SCF marketplace to such an extent?

SCF on SaaS vs. bank-led SCF

In a finance or bank-led approach, the SCF provider focuses on making a return from their capital employed. By deploying an SCF solution to the top 25 – 50 suppliers, the financier benefits as they cover the majority of the spend, and the buyer benefits from extending working capital. However, the solution does little for the wider company strategic goals.

In contrast, SaaS providers profit most when their solution is adopted widely among users. The goal therefore, in any SaaS-led SCF programme is to bring all suppliers on board. The net result from such an approach is that you, the buyer, still reap the benefits of improved working capital, but now also benefit from enhancing the strength of your entire supply chain and reduced Cost of Goods Sold (CoGS), thereby contributing directly to improving your company’s competitive position in the marketplace.

How Treasurers and CFOs benefit

Key priorities today for CFOs and Treasurers remain much the same in terms of:

  • Managing risk

  • Being efficient

  • Optimising the cash cycle

  • Effective allocation of corporate resources.

However, it is this fourth area, the effective allocation of corporate resources where Treasurers and CFOs are now working more closely together in support of the wider company goals. And this is where SCF technologies are starting to make a real impact.

Deployment of these modern SaaS platforms is enabling Treasurers and CFOs to reach business objectives that go beyond mere cost reduction by allowing companies to improve the way they interact across internal functions and systems, and with third party suppliers. And the reason for this is simple; SaaS technologies embody the concepts of simple to use, high availability, plug-and-play integration and scalability. The net result of this is that rapid deployment and wide-scale adoption is far simpler than for a traditional on-premise style solution.

SaaS SCF solutions therefore scale much more easily to the whole supply chain and therefore deliver the promised benefits of SCF to the whole supply chain, improving its health and helping drive the competitive position of the buying organisation.

Treasurers and CFOs are moving beyond thinking of IT as a commodity item into assessing technology as a strategic competitive consideration for the business.

The SaaS revolution

It is this ‘enabling’ approach to support wider strategic objectives provided by SaaS that is causing such a stir in the marketplace. Without any doubt, the market landscape for SCF, and the benefits brought by this new generation of providers, will mean that the relationship between buyers and suppliers will look very different five years from now.

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