topleft
topright

Login or Register


Red-Hot Thread

"The corporate brand is not only used to improve competitive positioning and express company aspirations, it can also be a powerful tool to motivate employees."

CFOZone Experts

A short description about your blog


Apr 01
2011

Caterpillar’s supply chain finance program opens door for others

Posted by dbedell in supply chain financeCash

dbedell

Industrial equipment maker Caterpillar is taking advantage of the Export-Import Bank of the United States’ (Ex-Im Bank’s) new Supply Chain Finance Guarantee to provide receivables financing to its suppliers. The company’s suppliers will have access to as much as $450 million – provided by Caterpillar's bank partner JPMorgan Chase – which is back by a 90 percent guarantee from Ex-Im Bank.

The program from Ex-Im Bank is intended to create greater access to financing for small and medium-sized businesses in the US by supporting SCF programs for export-related receivables. JPMorgan is the first bank to join the program, which will not only help suppliers manage liquidity, but as a consequence will also help strengthen Caterpillar’s supply chain by ensuring that its suppliers have ready access to working capital.

Dani Cotti, Global Trade Executive at JP Morgan Treasury Services, explained: “Caterpillar’s suppliers are currently seeing cash flow improvements and working capital benefits as a result of discounting their accounts receivables in exchange for faster payment."

Plus, Caterpillar can extend its payment terms with suppliers, thus improving its own working capital management.

The program could open doors for other multinationals to build an SCF program for export-related production. At a time when the weak US dollar is making US exports more competitive in global markets, this provides a good opportunity for companies to improve efficiency of working capital to better-manage international growth strategies, with a strong supply chain behind them.

Under the program, suppliers must meet the Small Business Administration’s definition of a small business, and receivables must be related to end-products that meet certain US content requirements, among other things.

Comments (0)Add Comment

Write comment
You must be logged in to post a comment. Please register if you do not have an account yet.

busy
Copyright © 2009-2014 CFOZone. All rights reserved. CFOZone is a property of PSN, Inc.