How Fintech has Revolutionised Supply Chain Finance

March 25, 2016 Jon Barrett

The benefits of a Supply Chain Finance programme for both buyers and suppliers are well documented (here’s a decent overview) but in this article I wanted to focus less on the ‘theory’ behind SCF, which remains robust, and focus more on the execution of SCF programmes, which has been transformed by Fintech.

Since it’s inception, the ‘open secret’ within the Traditional SCF industry (a space dominated by Banks and legacy platforms) was the inherent number of challenges faced by traditional providers which significantly restrict the scope, scale & success of SCF programmes. What those challenges are & why many businesses are embracing next generation SCF programmes is the focus of this article.

Here we highlight 6 areas where Taulia (a leading Next Generation SCF provider to Fortune 500 & FTSE 100 companies) has revolutionised what is possible in Supplier Finance vs the traditional approach:

1. Making finance available to ALL of your suppliers, not just the largest.

Traditional approach:Traditional solutions can focus only on a handful of your largest suppliers (typically referred to as the ‘Short Tail’), due to the inherent operational restrictions & bureaucracy. This significantly reduces programme scope, leaving many thousands of your suppliers without access to SCF & also a considerable majority of your spend.

Taulia approach: Why limit your Supplier Finance programme based on the operational restrictions & motivations of your solution provider? By leveraging agile Technology, you can make Supply Chain Finance available to 100% of your spend across 100% of your suppliers, by removing the considerable friction imbedded in the traditional approach.

2. Solving the challenge of endless Supplier On-boarding

Traditional Approach:Paperwork + Bureaucracy + Manual Processes + People = A Traditional SCF on-boarding experience requires a lot of effort for all parties. Suppliers can take between a few weeks and a few months to join a programme, impacting relationships & limiting programme scope. The buyer, the bank & the supplier is heavily involved with the processes from start to finish, requiring significant investments in resource, processes & time.

Taulia Approach: Paperless + Full Automation + Full Support= A next generation on-boarding experience that takes the supplier less than 90 seconds to fully onboard, opening up your programme to your entire Supply Chain.

Taulia also take the burden off the buyer when it comes to supplier outreach & education. This gives suppliers the autonomy of self-service, putting them in control & giving you the ultimate peace of mind that you can exceed your corporate objectives & partner with your suppliers, without the traditional effort.

3. Delivering Fully Automated, Integrated & Scalable Programmes

Traditional Approach: After you’ve been through the process to onboard a supplier, you now enter into the day/day programme administration. You will need to securely send the approved invoices (typically in a proprietary format) and once they’re paid, reconcile a file back (in that proprietary format) so you can update your ERP system manually. You’ll need additional processes, operating controls, IT build & headcount for programme management to help reduce the risk of errors & double payment. Unfortunately, the same workload and effort is typically required of your suppliers as well. This level of friction acts as an enormous barrier to the scale and success of your programme.

Taulia Approach: You run your business from your ERP, so why not let your ERP run your programme? Thanks to Taulia’s ERP integration, Invoices are automatically made available for early payment as soon as they’re approved in your ERP system — giving you the largest possible window of opportunity. Once a supplier elects for an early payment (via your fully branded & easy to use portal), your ERP system is automatically updated & reconciled. Next Generation programmes deliver the automation & integration necessary for scale and frees up both your time and your suppliers time to focus on running your businesses.

Want to see what Taulia’s suppliers experience looks like in 3 minutes? Click here

4. Maximise your funding window, maximise your opportunity.

Traditional Approach: Send us your approved invoices once they’re approved. How long it takes you to approve them is down to you, we can’t help.

Taulia Approach: For a truly optimised programme, you need to be able to offer your suppliers the largest possible window to accelerate payments & that means getting your invoices approved as quickly as possible. Taulia’s suite of Accounts Payable automation tools allow you to leverage best in class electronic invoicing & integration to enable fast, automated invoice approval, driving operational efficiency — giving your suppliers the largest possible discount window. The bigger the window, bigger the opportunity.

5. Minimise Funding Risk, Maximise Flexibility

Traditional Approach: As a relationship bank & a key lender to your business, mandate us as the sole funder for your programme and we will always have balance sheet available as we are committed to you & the SCF space. We promise.

Taulia Approach: All of your relationship Banks are important, so why take concentration, pricing & market risk on just one? With over 100 existing Bank & Capital Markets funders eligible for our programmes & the seamless ability for you to invite more, you remove the risk of a Bank hitting it’s credit cap, changing it’s credit appetite towards your business or exiting the Supply Chain Finance space altogether — all whilst maintaining the sharpest possible pricing for your suppliers. Taulia’s approach goes further too, by allowing you the ability to leverage your own cash alongside third party cash to support your suppliers, giving you the ultimate funding flexibility to support your supply chain & your business objectives.

6. Leveraging Data To Drive Performance

Traditional Approach: How is your programme performing? I’ll send you a spreadsheet in a few weeks…but I can tell you it’s doing great.

Taulia Approach: Without data, it’s just another opinion. The ability to access real time performance metrics, run bespoke reports, track KPI’s & benchmark against other best-in-class programmes are fundamental to modern programmes success. Having that data at your fingertips & giving you full access to a team who can help drive best practise is just part of the service.

If you’re interested in understanding how Taulia can help solve the challenges in your Traditional Supplier Finance programme or if you’d like to start afresh, we’d love to talk. Drop me direct line at jon dot barrett at taulia dot com.

If you’re keen to understand more about how the Taulia Solution works — why not take a look at our 3 minute demonstration:

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