UNCHAINED Mitigating your Hidden Risks Louise Beaumont Colin - - PowerPoint PPT Presentation

SUPPLIER FINANCE UNCHAINED

Louise Beaumont Colin Levins Waldo de Vleeschauwer

Mitigating your Hidden Risks

True stories

Report published by Zurich

• Survey comprised of

– Senior Management – 500 UK companies – Five sectors

Zurich Report’s executive summary

Supply Chain disruptions - manufacturing

• 70% say healthy suppliers are critical
• Only 49% admit their supply chain is reviewed and monitored at board level
• 68% confirm up to 10 disruptions in the past year alone
• 97% have suffered disruptions at some point in the past
• 52% believe supplier bankruptcy is the main cause of disruption
• Average disruptions lasts 6 weeks

– 60% suffered loss in sales – 54% suffered reputational damage – Costing £230k on average (excluding management time)

• 64% indicated greater interest in their supply chain in the next 12 months

So, what can you do?

Address the financial well-being of your suppliers

Here’s how

• The world as your suppliers see it
• A revolutionary Supply Chain Finance solution
• What are the benefits of Market-Driven SCF solutions?
• Who’s providing these solutions?
• Who’s using them?
• How do they work?

The world as your suppliers see it

You’re their cash rich corporate customer

The world as your suppliers see it

Your suppliers are finding it harder to access finance, which means there’s a growing risk in your Supply Chain Saturday, November 30th Headline

Small businesses find loans ‘rarer than diamonds’

Recession: high level consequences

• Massive pullback in bank lending
• The economy is dislocated

– Main indices such as the Dow Jones are at all time highs

BUT

– These only represent the world’s biggest companies – Zombie companies & Bankruptcies

• Unknown to bigger companies, there is a
• ver reliance on fewer, weaker suppliers

A revolutionary Supply Chain Finance solution for you and all your suppliers

 Online market places which connect buyers of invoices (Investors), seeking higher yields, to sellers (your suppliers), seeking immediate funding  Investors include banks, asset-based lenders, funds and family offices  Sellers are suppliers who are looking for alternative finance in difficult economic conditions

Market-Driven Solutions

A revolutionary Supply Chain Finance solution for you and all your suppliers

“Markets are inherently more efficient. The market can’t have a concentration risk, so the market can absorb risk that other solutions simply can’t – because they have a single source of finance. Markets, because they have many, many sources of finance, work for more companies, more of the time.”

Andy Davis – the leading AltFin journalist

The benefits of Market-Driven solutions

Your Suppliers

 On-demand finance  No legal, admin or IT costs  No IT barrier  No lock-ins  Multiple sources of capital  Competitive, transparent all-in finance rate  Flexible – on a per invoice basis  Reduced admin burden  Level playing field across all suppliers

Your Company

 No costs (legal, IT, finance, admin)  Fast to set up - days, not months/years  Seen to support suppliers in enhancing their working capital, without lock-ins  Effective negotiation tool  Competitive advantage  Option to manage creditor days and cut your finance costs  Dynamic Discounting, if you want to  No barriers to entry, no barriers to exit

Who is providing these solutions?

The Receivables Exchange

• US

PrimeRevenue

• US and Asia Pacific

Platform Black

• UK

Leveraging commercially-minded investors to deliver SCF for your suppliers

Suppliers

• Suppliers are encountering

growing liquidity problems

• Business funding shortfall of

£84bn to £191bn predicted by 2018

• More acute as the economy grows

Investors

• Seeking new ways to make

decent returns in a low interest rate environment

• Seeking the security of asset-

based investments in a post-crisis world In 2012, in the UK, the market for full invoice factoring delivered by banks and ABLs was £254bn – this accounts for 2%-3% of SMEs, which suggests that conventional forms of invoice finance don't suit most of your suppliers.

Scenario 1: End-to-End Supplier Funding

A large Manufacturer meets the increasing demand for its products while mitigating the risk of supply chain underperformance

Scenario 2: Creditor Day Management

A large Construction company seeks to better manage its creditor payment days while simultaneously retaining a healthy supplier base

Scenario 3: ROI Enhancement

A large Wholesaler wishes to help its suppliers obtain quick finance from its invoices while obtaining an enhanced yield on its cash

Scenario 1: End-to-End Supplier Funding

A large Manufacturer meets the increasing demand for its products while mitigating the risk of supply chain underperformance

Challenges

• Growth companies rely on

their supply chain to supply goods on time, on budget and to the correct standard

• Suppliers require payment

for their own raw materials

• Suppliers are often less

established with limited access to working capital Solution

• Using its strong credit

profile, the Company helps its suppliers auction orders and invoices at 100% of value

• Investors bid down to lowest

possible finance rate

• PB pays each supplier as

soon as the auction closes Benefits

• Enhanced supply chain

performance - suppliers are well financed

• Multiple suppliers are able to
• pt in and out of the

programme as and when it suits them

• Supply chain is well funded -

goods are delivered on-time,

• n budget and to the correct

standard

Scenario 2: Creditor Day Management

A large Construction company seeks to better manage its creditor payment days while simultaneously retaining a healthy supplier base

Challenges

• Challenging economic

environment - Company seeks ways to maximise cash positions whilst keeping their suppliers well- funded

• Increase in creditor days has

positive effect on net interest expense Solution

• The company sends

Platform Black monthly batches of invoices

• The invoices are auctioned,

after which funds are transferred to the suppliers

• The Company pays its

invoices on the agreed payment dates

• The solution is 100% free to

the Company Benefits

• Extension of creditor days is

interest-free finance, resulting in net finance savings

• Enhances working capital

management for the Company

• Suppliers enjoy early

payments - enhancing supplier relationships

Scenario 3: ROI Enhancement

A large Wholesaler wishes to help its suppliers obtain quick finance from its invoices while obtaining an enhanced yield on its cash

Challenges

• Seeking greater returns on

excess cash

• Creditor days > 30, causing

supplier working capital pressures

• No new suppliers not

tendering for business Solution

• Dynamic Discounting – acts

as investor for a % of its own invoices

• Seamless integration with

existing IT systems via API

• Free for Wholesaler
• Supplier only pays small fee

for traded invoices Benefits

• Healthy returns for own

credit risk

• Cashflow made available to

participating suppliers

• Full financial flexibility for

suppliers

• Cost of finance is bid down

by competing investors

How market driven SCF works

Q&A

November 2013 Winner UK Supply Chain Finance Provider of the Year

UNCHAINED!

Louise Beaumont Colin Levins Waldo de Vleeschauwer