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C2FO Powers Early Payment Programs for the World’s Largest Companies.
Discover expert insights on working capital, cash flow optimization, supply chain management and more.
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Iconic IT provider adopts an innovative early payment program to strengthen its global supply chain, streamline its accounting systems and improve returns on cash.
Hewlett Packard Enterprise (HPE) was recently honored by Treasury & Risk with the Alexander Hamilton 2022 Silver Award in the Working Capital & Payments category by scaling its supply chain finance program globally.
HPE Capital Markets Director Mike Seal accepted the award during a May webinar, where Seal spoke of HPE’s success implementing C2FO’s Dynamic Supplier Finance (DSF) platform.
Now in their 27th year, the Alexander Hamilton Awards spotlight companies that are making major advances in the fields of treasury, finance and risk management, either by reinventing their processes or implementing new technologies.
Other award winners were:
Boston Scientific launched a broad initiative to standardize supplier payment terms, implemented a supply chain finance program, then tweaked the program and educated suppliers in a targeted way to maximize the program’s benefits.
General Parts Company responded to COVID uncertainty by revamping its approach to both corporate borrowing and supply chain finance. The company gained $800 million in additional liquidity, issued its first public debt and improved its cash conversion cycle by 58%.
Faced with COVID-related challenges, especially computer chip shortages, HPE — which serves enterprise-level customers, not consumers — sought to implement an early invoice payment program to aid more than 1,500 suppliers.
HPE selected C2FO and its patented Dynamic Supplier Finance platform from a pool of potential supply chain finance providers.
Within 60 days of implementation, HPE:
Provided roughly $100 million in payments to a diverse supplier base.
Improved operating margins by reducing cost of goods sold (COGS).
Garnered appreciation and goodwill from suppliers by providing a cash flow solution usable in both stable and volatile economic times.
According to HPE’s Seal, the company had begun researching early payment programs pre-COVID, but the pandemic raised the visibility of emerging issues such as product and workforce shortages, supply chain delays, rising prices and liquidity challenges. Both HPE and its suppliers were negatively affected as HPE faced both use-of-capital challenges, and returns on capital and available cash that Seal described as “close to nothing.”
Knowing technology’s vital role in successful early payment programs, HPE selected C2FO as its provider. Gaining internal buy-in at HPE was critical, and input was sought from the company’s accounting, compliance, IT, tax and procurement departments. The program’s scope was global, involving 1,500 suppliers and many weekly or monthly invoice discount offers, so process automation was a must.
It was especially helpful to HPE that many of its suppliers were already using the C2FO platform, which made it easier to make connections and get their participation. By “hitting the ground running,” HPE saw results almost immediately.
With suppliers making offers that met HPE’s desired rate of return, payments were facilitated through HPE’s general ledger without disrupting HPE’s accounting and accounts payable teams. Perhaps best of all, Seal said, was that C2FO provided a hands-off solution requiring little, if any, new headcount.
Perhaps best of all, Seal said, was that C2FO provided a hands-off solution requiring little, if any, new headcount.
Even better — and in contrast to the scant income resulting from cash or money market investments — early payment income was booked above the operating profit line. This reduced the COGS and boosted gross margins, something not often attributed to treasury departments. This made for a well-deserved and ongoing “feather in your cap” moment for Seal and his team.
Achieved helpful internal buy-in upfront through collaborative, multi-team participation.
Earned higher rates of return on cash.
Generated “good news” communications with an appreciative supplier base.
Experienced no disruptions to established AP programs.
Provided lower annualized financing costs for suppliers using the early payment platform.
Minimized ongoing headcount to support the program with automated programming.
Provided access to third-party funding, if needed, to maintain buyers’ experience and benefits.
Established a scalable program to meet the needs of suppliers outside the United States.
As an HPE strategic supplier said, “The HPE C2FO Early Payment Program provided us with quick, simple access to working capital. It is a flexible tool to manage during both times of certainty and volatility.”
Dynamic Supplier Finance benefits large enterprise vendors like HPE with flexible funding options, while early payments for suppliers remain convenient and seamless. Unlike traditional and static net 30-style payment terms that give suppliers little or no control over when they’ll get paid for approved invoices, Dynamic Supplier Finance empowers suppliers to get paid for approved invoices when they need the funds. And buyers benefit from having more choices: leverage cash on their balance sheet for paying outstanding invoices, or leverage a bank or partner through the funding network.
Speaking recently on the “Fintech One-on-One” podcast, C2FO founder and CEO Alexander “Sandy” Kemper said that Dynamic Supplier Finance delivers to companies the working capital they need to grow by efficiently connecting sellers and buyers at agreed-upon early payment rates. For participants, it’s often their most convenient and lowest-cost source of capital.
Dynamic Supplier Finance is used by companies in many industries, including retail, technology, transportation, manufacturing, distribution, automotive and aerospace, among others.
View the full Alexander Hamilton awards webinar, or learn more about Dynamic Supplier Finance.
HPE earns greater returns while strengthening its supplier base.
C2FO delivered a streamlined, scalable solution that created several wins for HPE and its supplier base.
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