Building supply chain resilience with embedded finance

Supply chain disruptions are a fact of life – but with the right tools, companies can build truly resilient supply chains.

From geopolitical tensions to natural disasters, the last few years have brought no shortage of momentous events that have disrupted trade routes and manufacturing hubs. But the most dangerous threat isn’t always the headline-grabbing disaster – sometimes it’s a silent crisis that happens invoice by invoice, payment by payment.

For companies around the world, slow capital movement and poor financial visibility can undermine operational efficiency. Manual processes, missing paperwork and approval bottlenecks can all delay payments to suppliers. And the numbers are hard to ignore: SAP Taulia’s 2024/25 Supplier Survey found that 51% of suppliers are paid late – and for one in five, payment is delayed by more than 30 days.

As well as adding days or even weeks to the payment cycle, these inefficiencies can lead to a dangerous lack of visibility, rendering buyers unaware of the financial stresses within their supply bases, and putting supply chains at greater risk of disruption. If a supplier fails because of a cash flow crisis, the buyer’s entire production line could grind to a halt.

To build resilience, it’s clear that companies need to close this liquidity gap.

Embedded finance in action

So how can companies address these challenges? The answer lies in a powerful shift in thinking and technology known as embedded finance. With financial services directly embedded into their operational systems, companies are better placed to move capital instantly and contextually.

This is where the SAP Taulia advantage becomes clear. By integrating working capital solutions seamlessly into the native SAP environment, SAP Taulia transforms the ERP system into a strategic command center for cash management and supplier liquidity.

When companies are looking to support a diverse ecosystem of suppliers, they also need a diverse portfolio of tools to meet their needs. As such, SAP Taulia advocates for a multifaceted approach that includes virtual cards, dynamic discounting and supply chain finance.

Virtual cards

Within this toolkit, virtual cards are particularly agile and versatile. Using SAP Taulia’s virtual cards solution, companies can pay their suppliers instantly without the need for complex file handling. This is particularly suitable for paying smaller suppliers that may lack the desire or ability to participate in more formal financing programs.

When an invoice is posted, SAP Taulia’s technology works with the ERP to automatically issue a virtual card number (VCN) to the supplier, enabling them to process the payment immediately. Reconciliation is automated in the buyer’s ERP.

Single-use numbers and pre-set limits eliminate the risk of fraud, theft or overcharging. Companies can also use virtual cards to extend their payment terms and optimize cash flow, with suppliers receiving payment straight away.

Dynamic discounting

Dynamic discounting is a solution that enables buyers to use their own cash to pay suppliers early in exchange for a discount. Suppliers can choose when to accept payment, with discounts applied on a sliding scale – the earlier the payment, the greater the discount.

For buyers, dynamic discounting provides attractive, risk-free returns on surplus cash while reducing the cost of goods purchased. Suppliers, meanwhile, gain access to affordable liquidity while reducing their Days Sales Outstanding (DSO). With certainty over when payments will be received, suppliers can also forecast their cash flows more accurately.

Furthermore, dynamic discounting can help to build a more resilient and stable supply chain by helping to improve the financial stability of key suppliers.

Supply chain finance

Alternatively, companies may wish to preserve their own cash for other strategic priorities – in which case, supply chain finance may be a more attractive option.

Like dynamic discounting, supply chain finance enables suppliers to receive payment early, but in this case payment is provided by a third-party funder. As such, buyers can maintain their standard payment terms while enabling suppliers to access early payments.

Supply chain finance mitigates the risk of supply chain disruption by helping suppliers access the liquidity they need to operate and fulfil orders – a particularly valuable option for high-growth suppliers or those operating in volatile markets.

Flexible funding

Better still, companies don’t have to choose between dynamic discounting and supply chain finance. SAP Taulia’s Flexible Funding model allows businesses to switch seamlessly between self-funded dynamic discounting and third-party-funded supply chain finance – or even run both programs at the same time, targeting different supplier segments.

For suppliers, there is no difference between the two options – either way, they can use the same interface and can access a reliable, predictable source of cash.

The role of AI

Having access to a powerful portfolio of tools is only part of the story. What makes these solutions truly strategic is the artificial intelligence layer that can elevate working capital management from a reactive discipline to one that’s both predictive and proactive.

Within the SAP Taulia platform, AI is not just a buzzword – it’s a core competency that drives value-added capabilities:

• Predictive spend analysis analyzes supplier behavior using millions of anonymized data points. It then recommends the most suitable discount rates for early payment offers, maximizing supplier adoption and financial returns.

• Intelligent decision automation uses AI to recommend the right financing lever for the right supplier. It can also prioritize payments to critical suppliers in order to prevent potential disruptions.

• Cash analytics provide actionable insights into cash flow across the business using AI-powered models. This can help finance teams make smarter, data-driven decisions.

It’s clear that the market is ready for these opportunities. In SAP Taulia’s latest Supplier Survey, 38% of suppliers cited AI as a top priority for improving their own operations, demonstrating their willingness to embrace intelligent, data-driven tools.

To build a stable supply chain, companies need to prioritize the financial health of their suppliers – and embedded finance can play a powerful role in supporting this. By integrating working capital tools into core SAP workflows, SAP Taulia enables companies to react in real-time and take strategic financial actions when they’re needed.

For true agility, we also believe companies need access to an integrated portfolio of solutions. By deploying a combination of AI, virtual cards, dynamic discounting and supply chain finance, companies can build the flexibility and financial shock absorbers they need to navigate any disruption.