How to optimise cash flow and working capital management by implementing a supply chain finance program
The Investec supply chain finance program, powered by TreasuryONE, can optimise cash flow and working capital management for companies. The program enables buyers at companies to obtain cost-effective and efficient payment terms with their numerous suppliers and at the same time provides suppliers with a mechanism to receive an early settlement.
The program is a zero cash outlay program: there are no fees, costs, or charges of any kind and provides working capital benefits to corporate buyers of goods and services by enabling cost-effective and efficient terms extensions with their suppliers. Suppliers are provided with the cashflow benefits of their receivables in one working day following invoice approval, at rates not usually available to the supplier or by traditional bank lines or factoring.
Theron Theunissen, Head of Supply Chain Finance at TreasuryONE, commented, “Every business and supplier base is unique. Therefore, your supply chain finance program, its goals, requirements and principles underlying program execution will also be unique.”
“Because of complex finance systems, various payment terms for various suppliers, and many other headaches that finance teams within the construction industry face, not only do they require a supply chain finance provider that is flexible, but also a program that is similarly flexible and scalable to their individual requirements.”
The Program has three key role players:
- The Buyer,
- The Buyer’s Suppliers or Vendors; and
- Investec Bank, the custodian
The technology used to facilitate the program plays a critical role in simplifying the offering for buyers and suppliers and ensures that an efficient and effective program is maintained throughout.
The program is broken down into 6 steps:
- Buyers receive invoices from their selected supply chain finance suppliers in accordance with standard business processes.
- Approved invoices are integrated into the supply chain finance system through a direct connection with the Buyer’s ERP.
- Suppliers are notified of all invoices that are available for early settlement.
- By logging into the supply chain finance system, suppliers select the invoices they want to receive early payment on.
- Once invoices are selected, payment instructions are generated, and Investec Bank completes the final settlement to suppliers.
- The final step in the process will be for buyers to repay Investec Bank on the original invoice date.
Theunissen concludes, “Supply Chain Finance is a powerful financial tool where a third party facilitates an exchange by financing the supplier on the customer’s behalf. For suppliers of either products or services, these businesses can gain a significant financial advantage by becoming part of a supply chain finance program alongside one of their buyers.”
TreasuryONE is SA’s market leader in providing a broad range of best practice treasury solutions, treasury & RPA technology and market risk advice to organisations of all sizes. TreasuryONE has delivered treasury solutions to support the SA’s largest enterprises for the past 21 years and never wavered from our vision to unlocking value for Clients.
TreasuryONE’s product offerings include the delivery and support of treasury management technology systems, robotic process automation (RPA) solutions, market risk management and execution services, corporate treasury services, cash and liquidity management, money market funds, corporate payment factory and supply chain finance technology. Clients experience the value of enhanced treasury performance and reduced risk in today’s demanding economic environment.