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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.
We believe all businesses can and should have equitable access to low-cost, convenient capital to grow and thrive.
Flexible funding solutions can strengthen supplier relationships.
At the Americas Procurement Congress 2022, Steward Stanton, managing director at C2FO, and Kitty Patel, vice president, Americas and India, at Pendulum Associates, led a discussion on the opportunities organizations have to ensure their suppliers have access to working capital.
Stanton and Patel shared approaches buyers can take to support their suppliers with convenient and consistent access to reliable funding sources that are fast, easy and equitable. They also touched on some other trending topics, including:
With inflation, disruptive global events and continuous supply chain challenges, procurement professionals need to rethink their strategy to stay flexible and nimble in times of uncertainty.
“What we are seeing from procurement is the recognition that the practices and processes they have had in place over the long haul aren’t necessarily working now,” Stanton said. “There’s no magic bullet for getting ships to go through the port these days. Today, you need to think outside the box and rely on third parties to bring new expertise.”
A leading concern for procurement professionals is supplier health. And the No. 1 way to positively influence supplier health, according to Stanton, is liquidity.
“Whether you’re a large strategic supplier that has leverage, or you’re a diverse supplier or a small supplier, liquidity is still front and center at any company these days,” he said. “So, finding ways to get liquidity to your supply chain (is critical) — whether you have it on your own balance sheet or can take advantage of a fintech solution like C2FO, or use third-party liquidity, banks or hedge funds.”
With more liquidity, companies can solve potential or lingering supply chain issues, and third-party providers will be able to offer buyers more ways to engage in early payment.
By deploying more liquidity to your supply chain, organizations can help unlock some of the challenges their suppliers are facing and overcome potential lingering supply chain issues.
With access to payment data across the supplier landscape, buyers can make more strategic decisions on payment timing and terms. An early payment marketplace not only provides a place to offer earlier payment on outstanding supplier invoices, but also captures massive amounts of data that can be utilized to provide companies guidance on how to best engage with their suppliers based on size, industry, region and more. (The early payment platform itself may not be able to perform this segmentation; that may be a task better handled manually or by another tool.)
“There’s no payment solution that is one-size-fits-all, so using data to segment your supply chain is one of the best things we see happening today,” Stanton said. “(Understand) who your strategic suppliers are, who your core suppliers are, and then who is small, medium or diverse. Then you can set up programs and dial those needs differently rather than treating them all as one.”
Revolutionizing the approach to working capital within an organization requires support from many teams within an organization, and a project like this can naturally necessitate companies to work cross-functionally in ways they haven’t done in the past. Procurement, treasury, inventory, sales – these are all teams that will need to get involved and weigh in on a new solution for providing working capital. Innovative companies are starting to place key finance leaders in strategic, and maybe unexpected, places to foster more cross-team collaboration.
“A lot of companies are putting CFOs within their procurement organizations,” Stanton said. “Whether it’s a finance role or a CFO title itself underneath procurement, we’ve seen that make incredible strides in terms of getting companies to think differently about solutions, whether it’s liquidity and working capital, or having a better strategy to go to market with.”
In this article:
Minimizing supply chain risks can lead to reduced liquidity for global enterprises. Thankfully, there are ways to address both to optimize your balance sheet.
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