Financial Supply Chain Management

Critical components in your supply chain are at risk - and you may not even know it. There are numerous points of failure in today's complex supply chains and because of the difficulty that upstream suppliers have funding their business from day to day, the risk of a damaging and expensive failure is increasing. And it gets worse. Efforts to cut costs have resulted in leaner, riskier supply chains held together by a network small suppliers. If the risk of financial failure isn't mitigated it could have disastrous consequences - which is why businesses - especially in Europe - should begin to take supply chain finance more seriously.

There are a few things that make Stephen McPartland unusual. He's a scouse Tory (trust me - it's unusual) who writes for the Morning Star campaigning about corporate tax avoidance (and you thought a scouse Tory was unusual) and, on top of that, he gets e-business. That's right - a politician that understand e-business. Now that is unusual! I went to the House of Parliament in London to speak with Stephen about why he believes now is the time for the UK to act on e-invoicing.

New York - the lights, the excitement, the glamor, the Post Office. A compelling argument for electronic invoicing. [caption id="attachment_7294" align="aligncenter" width="540"]This Post Office in the heart of Manhattan is open for business This Post Office in the heart of Manhattan - one of the busiest and commercially vibrant cities in the world - is open for business. I stood in line for 45 minutes to buy a stamp.[/caption]

I'm old enough to remember the pioneering days of the internet and the growth in the use of internet technologies in the B2B landscape and about 18 months ago, I caught up with an old friend and erstwhile colleague, Mike Zealley, who I worked with during those exciting times. We spent a lunch time recalling the predictions we made in the late 1990s about what could be done, what was possible and how different the world would be. The disillusionment of the dot com crash may have taken the sparkle off but today, many of the things that we predicted have come to fruition - some in an uncannily accurate way. So it was it was uncanny last week when I went to visit Oxygen Finance in London that the first thing Roberto Moretti, their European CEO, said to me was “Mike Zealley sends his regards.” The second thing he said to me was “Pete, let me introduce you to Mark Hoffman”.

This is an important piece of research. For the first time, independent evidence points to a rapid growth in the adoption of e-invoicing and a significant change in the motivation for implementation. A wide range of organizations, from SMEs to large global businesses were surveyed in 2012 to understand their experiences and aspirations for payment technologies. Some of the results of the research  are, to be frank, predictable, while others were a surprise. Overall, the research paints an optimistic picture for technology vendors and their clients who are benefiting from their solutions.

One of the interesting things about the debates around financing models is the notion of paying “early” and the use of paying “early” as a negotiating tactic to secure a discount. The obvious question is “early” in relation to what?  The answer is usually “early” in relation either to existing terms and conditions or to custom and practice. It may possibly be “early” in relation to an uncertain payment date – I heard recently of one company which simply settles accounts on an annual basis.

In 2012, the supply chain finance debate became louder and more relevant to more businesses. It’s been described as the perfect storm – the combination of constrained liquidity and very low interest rates means that the gradient between the business “haves” and “have nots” has become steeper – and banks and investors love steep gradients. Supply chain finance is not new but new approaches are emerging based on new and innovative use of technology. In the past, the banks were the only players and they would only play with the big boys. For it to be profitable, the numbers had to be big and the cost of entry was high. But now, as collaborative supplier networks and the associated technology have matured more complex deals can be managed and the cost of entry has plummeted. Increasingly, businesses as well as individuals are turning not to the banks, but their peers for financial support.