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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.
The right early payment platform can help you strengthen your supply chain, meet ESG and DEI goals, and boost profits so you can outperform your competition.
The grocery industry is dynamic and can be characterized by its fiercely competitive and volatile nature. To survive and thrive in this market, grocers must overcome a myriad of obstacles that demand strategic solutions. From navigating intricate supply chain management issues to combating thin profit margins, labor shortages, inflation, shifting consumer behaviors and rapid digital transformation, grocers face an evolving landscape.
In recent years, mounting costs and other economic factors have also had a detrimental impact on grocery suppliers’ working capital. The combination of rising interest rates and stricter credit conditions has made it increasingly difficult for these businesses to secure affordable funding. Small and midsize regional suppliers, in particular, have found themselves in a credit crunch, putting supply chains at risk.
Fortunately, a solution exists. C2FO’s Early Pay platform offers a win-win early payment scenario for both enterprise grocers and their suppliers. This innovative solution plays a critical role in helping suppliers maintain healthy working capital. At the same time, grocers can strengthen their supply chain and gain greater control over their margins, allowing them to better manage inventory, receive orders in a timely manner and keep their pricing competitive.
In this article, we’ll explore how an early payment platform can help you support a healthy supply chain, and suggest things to consider when choosing the right platform for your business.
While early payment in any form can help your suppliers maintain a steady cash flow, the right platform can increase the benefits for both you and your suppliers. It can ease margin compression, improve supplier management, increase platform adoption and more.
Margin compression occurs when the cost of goods sold (COGS) rises faster than the returns, leading to a decrease in profit margins. While increasing your prices may seem like an obvious solution, it can be risky in a highly competitive market. It can upset your customers and might lead to them switching to a lower-priced competitor.
Alternatively, offering suppliers early payment in exchange for a discount can alleviate margin compression, as well as boost your profit margins and ensure cost stability. Even better, implementing an early payment program that supports dynamic discounting can help you achieve higher returns compared to one that uses static discounting. Invoice discounts can ultimately help reduce your COGS, resulting in significant cost savings and higher gross margins.
Early payment programs are also a risk-free way for finance or treasury departments to increase cash yields. For example, since launching, Costco’s Early Payment Program supported by the C2FO platform has generated billions of dollars in capital flows for suppliers while providing Costco with significant income generation, increased gross margins and a 400 to 500 bps increase in treasury yield.
Sustaining a healthy cash flow is crucial for small and midsize suppliers to maintain efficient operations and foster growth. In times of inflation and rising costs, suppliers need to shorten their cash conversion cycle (CCC) to ensure they have healthy cash flow. When suppliers lack funds for inventory orders, it can lead to delays or disruptions in your supply chain.
However, implementing an early payment platform and offering suppliers early payment in exchange for a discount provides suppliers with the necessary working capital to sustain their operations. It also reduces their need to take on additional debt, enhances their investment capabilities and increases their chances of survival.
Supporting your suppliers in this way also benefits your business. It reduces the risk of stock-outs, eliminates the need to search for new suppliers, improves your supplier relationships and helps you build a stronger, more resilient supply chain that can continue serving your business.
After you’ve made the decision to offer your suppliers an early payment program, the next step is to find the early payment technology provider that best fits your requirements and desired outcomes. You might need specific functionality or integration capabilities, so you’ll want to research providers to find the solution that will benefit your business the most. Here are some key factors to consider when you are evaluating an early payment platform provider:
An early payment platform enables you to offer early payment to your suppliers in exchange for a discount. However, the flexibility and financial benefits offered can vary depending on the provider you choose.
Some providers support discounting with static terms like 2/10 net 30, where you can only claim a fixed 2% discount in the first 10 days after the invoice is issued. On the other hand, a flexible rate approach like dynamic discounting allows your suppliers to offer a discount of their choice. The discount percentage can vary, but generally speaking, the earlier you pay, the higher the discount. This flexibility is beneficial to your bottom line because it can enable you to get larger discounts.
C2FO’s Early Pay platform stands apart from other dynamic discounting programs by employing a marketplace approach. It enables dynamic discounts to be accessed as early as day 11, 15 or even 21, providing flexibility and convenience for both parties.
With C2FO’s patented Name Your Rate® technology, your suppliers maintain autonomy and agency over their participation, deciding the rate they are willing to give to participate in early payment. This mutually beneficial approach allows for a higher discount to be captured as suppliers can offer discounts above, on or below the buyer target rate.
Great buyer-supplier relationships can increase efficiency, reduce costs, mitigate risks and create new revenue-generating opportunities for your business. Access to the right external support can help you nurture supplier relationships, and cultivate stronger and more efficient partnerships.
Implementing a successful early payment program requires educating suppliers and promoting the benefits of their adoption of the platform, which can be time-consuming for a busy procurement team. However, having access to dedicated external support can lessen this burden and allow your team to focus on other crucial tasks.
C2FO’s Early Pay platform enables you to optimize your supplier relationships and offer your suppliers fast and flexible working capital solutions. In addition, C2FO’s team of supplier relationship managers provides invaluable support, to ensure the success of your early payment program. For example, Albertsons was able to exceed targeted supplier adoption by 80% with all onboarding and support provided by C2FO.
The network effect is a powerful driver of success in business and technology. It refers to how the value of a product or service increases as more participants join. As a network grows, it attracts more users, suppliers or partners, leading to enhanced collaboration, efficiency and market reach.
When choosing an early payment provider, it is important to consider the network size and scale of influence. A platform with an extensive network of buyers means more of your suppliers will also be there, making it easier for you to drive program participation and increase your reach.
As the largest online platform provider for working capital, C2FO serves more than 2 million in-network businesses across 160 countries and has funded $241 billion in working capital since 2010.
Balancing your own cash flow while also supporting the financial health of your suppliers can be tricky. However, emerging technology and tools can assist you in managing, segmenting and harmonizing your payment terms to your best advantage. For example, Pendulum Associates offers you the ability to increase working capital, uncover cost savings and reduce value leakage within supply chains by using proprietary data to identify the appropriate payment term for your suppliers.
For enterprises prioritizing corporate social responsibility (CSR), establishing or enhancing a dedicated supplier diversity program can prove highly beneficial. This will not only strengthen your diversity, equity and inclusion (DEI) initiatives and enhance environmental, social and governance (ESG) strategies but also has the potential to boost your bottom line.
Diverse-owned businesses often struggle to qualify for affordable funding, which can make it particularly challenging for them to manage cash flow issues. One great way to support your diverse-owned suppliers, and meet ESG and DEI objectives, is to offer diverse suppliers a better solution to cash flow issues — early payment programs. To offer early payment to diverse-owned suppliers or provide early payment as an incentive to suppliers that adopt ESG best practices, you’ll want to ensure you choose a provider with the right capabilities to support your efforts.
C2FO’s supplier ESG and DEI programs, known as Opportunity Marketplaces, empower you to extend distinct early payment options to selected suppliers, so you can align the program with your own sustainability or diversity objectives. Through these marketplaces, you can take proactive steps to support your goals while providing valuable advantages to your chosen suppliers.
To compete in a high-stakes market like the grocery industry, maintaining supply chain stability is mission-critical. C2FO’s Early Pay solution offers an early payment platform that benefits grocers and suppliers. By offering early payment opportunities, your business can manage margin compression, improve cash yield, strengthen supplier relationships and build a resilient supply chain.
C2FO’s platform provides flexibility, a dedicated supplier relationship management team and access to a vast network of buyers and suppliers. Additionally, the platform supports managing payment terms, aligns with ESG and DEI objectives, and enables grocers to proactively support sustainability and diversity goals. By leveraging C2FO’s innovative technology and support, you can optimize your bottom line and thrive in a competitive market.
Discover how Albertsons Companies’ dynamic discounting program delivered a flexible cash management solution, 2.5 times the anticipated return and 80% higher than targeted supplier adoption.
In this article:
In a highly competitive industry, food and beverage supply chains must invest in new technologies and more resilient logistics to stay ahead.
Emerging supply chain finance solutions are giving leading manufacturers an effective way to strengthen supplier relationships and thrive amid disruptions.
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