Post on 21-Jan-2018
transcript
Part I: Why Treasury and Procurement Should Collaborate for a Successful Supply Chain Finance Program
May 16th, 2017
David Gustin | Co-founder| Trade Financing MattersGreg Person | Vice President Global Presales | Kyriba
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 2
David Gustin
Co-founder
Trade Financing Mattersdgustin@globalbanking.com
Greg Person
VP, Global Presales
Kyriba Corporationgperson@kyriba.com
Today’s speakers
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 3
History of SCF
State of the market
Treasury / procurement divide
Understanding your supply chain
Strategic execution with SCF
Role of technology
Discussion on trends and common challenges
Agenda
4Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution.
Timeline – Evolution of Supply Chain Finance
1999 Orbian
formed as
Joint Venture
between SAP
and Citibank;
Tradecard
launched SaaS
company
2003PrimeRevenue
formed
SEC releases
initial comments
on programs
related to rebates
2008Marketplace to
Auction
Receivables
introduced
Pcard programs
– Virtual
Account, Single
Use
2009Orbian supports
40 buyers –
Siemens and
GenMills prime
customers
Taulia founded
Kyriba starts
first program
GT Nexus
TradeCard
merger
JPM exits Xign
2005 Orbian
successfully
launched the
first
proprietary US
Capital Markets
funding
program
2000 OB10
founded
2012 SAP
buys Ariba
Accounting issue continues to affect market
5Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution.
The vast majority of trade credit sits on company balance
sheets in the form of payables and receivables
*Note: $2tn in USA, an estimated 3 trillion Euros of
accounts receivables outstanding in the EU,
estimated $8tn globally
• Trade finance is a large, global and
interconnected industry, encompassing nearly
$8tn in notional credit*
• Most of trade credit (~$7.5tn) is not
intermediated directly and remains on
corporate balance sheets (in the form of trade
receivables)
• Banks are the main third party source of
financing for corporate trade, but intermediate
roughly $500bn of trade credit (12%)
6Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution. 6
State of the Supply Chain Finance Market
• It’s still all about Working Capital = term extension
• Broad swatch of industry sectors embrace SCF…Across more geographies
• Regulatory - Bank regulatory costs have become less efficient than third parties
• Funding – Libor costs are increasing
• Big push by Banks to link to Capital Markets – not easy!
• Technology – it’s both platform and managed services
• Replacement market growing
• Huge sovereign wealth risk – South Africa downgrade, Italian banking system
• Multi-Bank solutions on the rise – so many reasons: banking crisis, non banks, etc.
• Onboarding challenges remain – high fixed costs to onboard relationships you don’t bank
• Government push back on supplier term extension – Australia example
• Operations and Accounting challenges still exist
7Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution.
Polling Question
8Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution.
Why Conflicts Exist
CFO /
Treasurer
Procurement
Supply
Chain
Balance Sheet
Income Statement
Source & Use Statement
9Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution. 9
Trends: Alignment Is Key
Supply Chain
ProcurementCFO/
Treasury
Delivery
Cost
Innovation
Partnerships
On time delivery
Not always about cost
Working Capital
Liquidity
Investments
Compliance
Low cost capital
10Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution. 10
Trends: Understanding Your Supply Base Is Critical
Remaining suppliers
Critical suppliers
Diversity suppliers
Bottleneck suppliers
Large suppliers
Top category suppliers
JV partner suppliers
Remaining suppliers
Circle size denotes number of suppliers
11Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution. 11
Successful Lessons for Long-Term Programs
• Lesson 1: Supply Chain Finance is a tool…not a strategy
• Lesson 2: Risk Control is always #1
• Lesson 3: Continuous improvement is not an option
12Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution. © 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL.
How Treasury can help execute the strategic visionFree cash flow targets
COGS / EBITDA improvement
Supporting key supplier relationships
Process efficiencies (LEAN, Six Sigma)
What Is My CFO’s Strategic Vision?
13Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution. © 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 13
13
Cost of Goods sold
reduction
Assist Suppliers
▪ Is there a no-risk alternative to my low short-
term investment returns?
▪ Can I pay my suppliers at a discount?
▪ Are there geographical considerations to
optimize discounts?
Achieve Better Yield on Idle Cash or Reduce COGS
Working Capital & Operating Cash Flow Improvements
▪ Extending payment terms to some or all
suppliers?
▪ Maintaining existing payment terms if
receiving downward pressure on terms
from suppliers?
▪ Move suppliers off discount terms to net
terms?
▪ Improve supplier relationships?
▪ Assist suppliers in getting access to capital?
▪ Reduce supplier risk regarding cash flow
challenges?
▪ Is there better AP process to drive more
transparency & efficiency?
Supply Chain Finance to Drive Strategic Results
© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 14
Strategic Execution
Suppliers
Procurement/ AP
Treasury/ FP&A
Stakeholder Business Driver
Supplier Where’s my money?
AP Are we executing PO/Invoice/AP per contractual agreement?
Treasury Do we have enough liquidity?
FP&A Are we meeting FCF and working capital targets?
CFO Are we meeting investorexpectations?
15Copyright © 2017 Global Business Intelligence . All rights reserved. Not for distribution.
So How Does Technology Help?
© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 16
Fintech Fostering Alignment - What Gets Measured Gets Managed
FinTech Visibility
SupplierInvoice & Pay Status
DSO
AP Invoice & Payment
DPO
Treasury Cash Flow, Interest Inc
& Exp
CFO / FP&A Working
Capital KPIs & FCF
FinTech Execution
Supplier“Pay me
now”
AP
SCF Smart Payments (funded v
non)
Treasury
SCF Bank Programs & Onboarding
CFO / FP&A
Improve FCF, DPO
Measurement SCF Management
© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 17
How SCF can support initiatives• Cash flow / working capital, reduction in cost of
goods sold, etc.
• Identify opportunities on an individual supplier
basisUtilize individual supplier characteristics, credit scoring
and payment terms benchmarking
• Determine impact on supplier and buyer
• Iterative process – buyer tacit knowledge of
suppliers
• Cross functional win – led by you!
Where to Start?
© 2015 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL.
$0
$200
$400
$600
$800
AAA
AA+ AA AA-
A+ A A-
BBB+ BB
B
BBB-
BB+ BB BB-
B+ B B-
CCC+
Millio
ns
Spend
AVG of 65% of spend with non-investment grade suppliers
Financial cost and risk which could be mitigated with SCF liquidity
Supplier Demographic Analysis(Example)
© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 19
SCF solution to soften impact of term extension– Value messaging and execution critical to program success
Getting It Right the First Time
Segmentation (VSA) and
prioritization of suppliers.
Program design
Assist Corporate in creating suppliers
messaging / communication about
benefits of the program
1 Selection 2 3 4
Activate suppliers‘
requests to join the
program.Perform KYC and signature
of contract
Invitation & Education Activation Monitoring
Follow program KPIs
and adjust approach as
needed
Open Discussion
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 21
• The Critical Importance of Business Continuity Planning for TreasuryJune 13th, 2017 | 2:00 pm ET | 11:00 am PTApproved for up to 1.2 CTP and up to 1.2 FP&A recertification credits by AFP
• Simplifying Payments - Top 5 Reasons Why the Cloud Improves Your Payment PolicyJune 22nd, 2017 | 2:00 pm ET | 11:00 am PTApproved for up to 1.2 CTP recertification credits by AFP
Join one of our next Modern Treasurer webinar sessions:
© 2016 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 22
Additional Resources
eBook: Making the business case for supply chain finance
Get PDF at: http://kyri.ba/SCFeBook
Global Business Intelligence report: State of Supply Chain Finance Industry, Entering a New Era of Maturity
Get PDF at: http://kyri.ba/SCFstate
© 2017 Kyriba Corp. All rights reserved. PROPRIETARY & CONFIDENTIAL. 23
Thank You for Attending
facebook.com/kyribacorp
twitter.com/kyribacorp
linkedin.com/company/kyriba-corporation
youtube.com/kyribacorp
slideshare.com/kyriba
kyriba.com/blog