Solving same-day payments for supply chain finance

SCF programs run by technology vendors offer many benefits – but due to the number of partners involved, it can take several days for suppliers to receive early payments. In a recent initiative, Taulia worked with the supplier of a major European company to solve this challenge and deliver same-day payments.

Early payment solutions like supply chain finance (SCF) come in different flavors. In the case of bank-run programs, suppliers receive early payments from a single bank.

But other options are available – and companies like Taulia operate with a multi-funder model that allows customers to access funding from a network of banks.

The multi-funder model comes with numerous benefits: it allows customers access to a broader pool of capital at competitive rates, as well as mitigating risk, boosting resilience, and providing greater flexibility.

Programs provided by third-party vendors also tend to offer scalability benefits, enabling buyers to offer SCF to large numbers of suppliers, rather than just a small selection.

Cascade of processes

Two challenges many businesses have is unpredictable cash needs and time-sensitivity of payment settlement, or even worse, both simultaneously. These companies have been underserved in the SCF Industry as SCF payments can take multiple days from payment request to payment settlement.

When a supplier hits the ‘pay me early’ button, this triggers a cascade of processes for the buyer, SCF provider, partners, and investors. Each of these stakeholders has processes that take time to complete – and for some SCF providers, early payments can take up to five days to be paid into the supplier’s account.

If the customer approves its invoices promptly, there is still a sizeable window in which suppliers can request early payment via their SCF platform. But if customers are slower to approve invoices, this window can be significantly truncated. As a result, suppliers may find they are not able to accelerate their payments by as many days as they would like.

Delivering same-day payments

During conversations with one particular customer and its supplier, the issue of late invoice approvals and the impact of that on the supplier’s ability to use the available factoring program to ensure payment before month end was raised.

We wanted to address this need, so we invited the supplier to work with us and our partners to develop a faster payment process. Additionally, the customer was keen to start accessing a same-day payment option quickly – which meant we had just one month to build, test, and pilot the new functionality and go live.

Meeting this challenge was a team effort. We worked with our network of stakeholders, including partners and investors, to pull out all the stops and get the new functionality ready on time.

The tight timeline was met successfully, and since December, this company, and many others, have utilized this feature through Taulia to accelerate millions of dollars in invoices.

To make the most of this new functionality, we took the opportunity to release both a same-day and a next-day payment option, alongside a standard two-day payment cycle – thereby bringing the benefits of speedier payments not just to our pilot supplier, but to many other businesses besides.

Overcoming challenges through collaboration

Listening to feedback from our customers is vital when it comes to meeting their needs and driving innovation.

This initiative is particularly impressive because it demonstrates that our network of stakeholders is just as committed to our customers as we are. The partners and investors we work with are creative, flexible, and driven to be the best at what they do.

By working closely with our partners, we can overcome challenges, exceed people’s expectations, and deliver features that make life easier for businesses across our network.