TweetWhen Alexander Graham Bell, said “Watson, come here! I want to see you”, little did he suspect that in the 21st century, less than 150 years after he began his experiments, the telephone would be so ubiquitous that even in parts of Africa where there is no running water, there would be full cell phone coverage. And at that time, in about 1873, the “CFO” was a man in a tall hat with a quill in his hand in charge of a team of accounts clerks laboriously scratching numbers into leather bound ledgers. continue reading…

TweetIn a thought provoking and incisive article by Tracy Bramlet, she describes in some detail the adverse effects on the financial supply chain following the disastrous explosion that sunk the Deepwater Horizon rig, killed 11 workers that initiated the current spill that is pumping 200,000 gallons of oil a day into the Gulf of Mexico.

As she writes, it will be the regional firms, small businesses and individuals who make their living from the Gulf Coast’s seafood industry who will bear the brunt .  The fisherman, shrimpers and their families. These are the ones who will find it necessary to extend DPOs while trying to shorten DSOs in a bid to help keep their heads above water.  And with far too many of their suppliers and/or buyers in the same situation, relief from within their own supply chain is unlikely.  So these will be the ones who will struggle to get or pay a premium for credit.  These, unfortunately, are the ones for whom the crisis on the Gulf Coast may not just strain their physical supply chain but might just cause a full break in their financial one as well.

Today, we see enough business and economic reasons to see the sense in adopting 21st century financial supply chain methods like dynamic discounting. And now we are increasingly being made aware of the impact of natural, as well as man made, environmental disasters on our financial supply chains. In order to adapt, we need agility. Old ways of working just won’t do and with the technology and techniques at out disposal in 2010, we have  fewer and fewer excuses to blame acts of God on our ability to manage business.

TweetI read with interest an item by Jean-Pierre Foehn (Opening the supplier can of worms: can you really charge suppliers a fee to do electronic transactions?) that expressed, not for the first time, some fairly frank questions about electronic invoicing and the justification for transaction fees. The questions he raises are not new but it is good to see them  brought out into the open. continue reading…

TweetIn the depths of a recession, discretionary spend is the first targetfor cost avoidance and Enterprise application upgrades are easy to avoid. But if your organization uses PeopleSoft Financials 8.8, 8.9 or 9.0, an upgrade to 9.1 might just make sense as a means of avoiding cost.

PeopleSoft Enterprise Financial Management Solutions 9.1 focuses on improvements to period close, cash management and financial control and, importantly, introduces Dynamic Discounting and now is exactly the right time to take advantage of it.

Dynamic Discounting offers buyers an opportunity to generate over 30% return on capital. And you struggle to justify the cost of an upgrade? You can’t afford not to take a piece of this.

About Dynamic Discounting in PeopleSoft eSettlements 9.1

Organizations continue to look for ways to improve their cash management, optimize their working capital and a key area to focus on is recognizing discounts on liabilities.  Suppliers are now making this even more attractive by offering more discounts for early payments.

Dynamic Discounting in PeopleSoft eSettlements 9.1, enables suppliers to offer automated discounts for buyers who elect to pay their invoices early. Both suppliers and buyers can benefit from this new feature.  Whereas suppliers have always had the option to sell receivables to factoring companies or other lenders, Dynamic Discounting eliminates the need for third-party intermediaries, giving suppliers more direct access to funds.  Suppliers gain greater control over their invoicing policy and can better manage their receivable-based working capital by reducing their day sales outstanding (DSO) and ensuring on-time payment by giving buyers an incentive to pay invoices sooner.

From a buyer perspective, Dynamic Discounting offers the ability to recognize additional discount rates thus reducing the liabilities on the balance sheet and costs on the P&L.

The discount analysis tool in PeopleSoft eSettlements 9.1.is designed to assist the supplier and buyer by searching for scheduled payments, creating or accepting offers with the least discount for the capital required by a given date.  This allows the supplier or buyer the ability to analyze their working capital and attempt to create better offers and accept offers that support their working capital objectives.

TweetIn a recent report by Celent they report the surprisingly low rates of adoption in parts of Asia. China, Japan and India in particular are relatively slow to integrate electronic invoicing.

Why is this suprising?

The reasons for the slow adopting include tardy implementation of purchase to pay processes and importantly, a general hesitancy for business to engage closely with their banks as technology partners. But these issues should not be seen as problems. Rather, they are opportunities.

In the 1990s, the huge boom in business in what was described as the technology sector, stole swathes of market share from established competition largely because new businesses were able to take advantage of new technology without the cost and distraction off having to decommision legacy systems. Using established marketing and business practice and attacking mature pre-existing markets, they were able to leap frog the established competition by standing on their shoulders and launching themselves into the new millenium. This is exactly what China and India can do now.

Electronic Invoicing – With or Without the Banks

Fully automated and integrated purchase to pay processes utilizing electronic invoices to integrate and streamline the financial supply chain  - with or without the banks (see Dynamic Discounting – Kicking the Banks When They’re Down) – is much easier in a growing economy compared to establish economies with legacy business processes and legal frameworks and provides a platform for business with an even lower cost base than Asia enjoys today.

TweetAccountis published a really good article recently – “Why e-Invoicing Belongs to the Banks”

And if this were 2005, I’d have whole heartedly agreed.

The Banks’ brands were amongst the strongest in the world and their existing reach was universal and their existing trust network unquestionable. This was before they began to topple of course. The Banks still have trust in the sense that we all have no choice but to trust them and when the worst happens governments will – within limits – bail them out.

And core competence – absolutely. The Banks’ core competence is to facilitate trade and they have built impressive platforms on which global transaction services are delivered every second of every day..

And finally finance opportunities? In 2005, the Banks had a blank piece of paper. It is now 2010 and the paper is no longer blank. But worse for the Banks, even if they got their act together and started to deliver an e-invoicing product, constrained liquidity is preventing them from providing product to the market that is hungry for them.

Dynamic Discounting is Disintermediating the Banks

The market need not look to the Banks to satisfy their hunger. Organizations like Taulia, OB10 and Ariba can happily facilitate a healthy financial supply chain that allows buyers and seller to collaborate to reduce the cost of doing business without the financial products that the banks struggle to offer these days.

Dynamic Discounting is disintermediating the Banks – kicking them when they’re down – and the small and medium sized businesses that are taking advantage won’t be losing any sleep over it.

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The time is right for financial supply chain automation, especially in the EU and the marriage between Dynamic Discounting player Taulia and Readsoft, just announced, should be able to capitalize on the opportunity.

Bob Fresneda, President of ReadSoft Inc:“Our clients have been demanding solutions for dynamic discounting and early payment discounts and we are thrilled to deliver what they need. The alliance with Taulia just makes good business sense: their leading-edge solution can tightly integrate with ReadSoft’s and business-wise is natural extension to our offering that brings additional savings potential to our clients. We are now actively marketing Taulia’s Invoicement Suite to new and existing SAP clients, especially in North America.”

The “marriage” is more of a “menage a trois” as SAP is a prerequisite for any organization wishing to take maximum advantage of the Taulia/Readsoft synergy. With e-invoicing high on the agenda in SAPs home territory, the  partners should be able to make some great headway in Europe as well as North America.