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Opinions and views from expert CFOZone members.

Tag >> financial supply chain
Oct 08

Use cash to support the supply chain

Posted by dbedell in Wal-Martsupplierssmall business lendingSiemensIBMHPfinancial supply chainDPOdays payables outstandingcash flow forecastingCash


Cash-rich companies are starting to spend again-both on buying up cheap assets and on repurchasing shares, according to a number of media reports. But they also continue to use that cash to more effectively manage their supply chain, reduce cost of goods sold, and ensure supplier stability.

Enrico Camerinelli, senior analyst at Aite Group, says that very large corporates that are cash rich are not ready to put money in bank deposits, but still want to put it to good use. "They are looking at ways to use this cash to ensure business continuity, particularly by helping suppliers still in difficult situations without access to bank funding," Camerinelli says.

Sep 24

Misperceptions delay supply chain finance uptake

Posted by dbedell in supply chain financefinancial supply chainCash


Companies say banks are not doing enough to support their supply chain finance initiatives, according to a recent report from consultancy Aite Group.

The report found that the vast majority of corporate respondents felt that banks were responsible for the information gap that makes supply chain finance management difficult. In fact, 79 percent of companies that took part in the survey said that banks were responsible for an information gap as a result of poor data communication, and 61 percent said banks are simply not providing enough information, which respondents said are both in part responsible for the delay in further uptake of corporate SCF programs.

Jun 02

Comprehensive supply chain finance still not here

Posted by the Benche in supply chain financefinancial supply chainCashCareers/ManagementBanksBankingbank relationship management

the Benche

Submitted by Niklas Callerström, Miriam Hard, and Niclas Osmund of SEB, republished from the Benche, a financial community for corporate treasurers.

Growing international trade between emerging markets and between developed and emerging markets, paired with the still ongoing global economic crisis has put its finger on an important issue; the physical supply chain must be supported by an equally important and well functioning financial supply chain. The financial supply chain works like oil in the engine, making things run more smoothly without malfunctions.

May 24

Local currency payments increase supplier financial strength

Posted by dbedell in supply chainRiskforeign exchange managementfinancial supply chaincash managementCash


Mounting concerns over the euro highlight the importance of currency risk management for companies with operations or exposures outside their home country. One critical component of currency risk management is reducing foreign currency exposure by matching payment funds to the currency of the invoice when you have available liquidity in that currency—so-called payment currency matching. By doing this you reduce the impact of currency fluctuations between the date of invoicing and the date of payment, and you can better predict outgoing cash flows going forward. This is desirable for daily treasury and cash management payments, but also—and perhaps even more importantly—it is important in managing payments to suppliers.

Any global or regional liquidity management program—which brings together a company’s excess liquidity from different countries into a central account for credit and investment management--is aimed at reducing currency risk by ensuring that available local liquidity is used first to make local payments—thus creating a natural hedge by decreasing the amount of local currency that must be purchased to make local payments—before being swept into any regional or global liquidity accounts.

Apr 30

Supply chain integration won’t happen overnight

Posted by dbedell in trade financeSWIFTfinancial supply chainCashaccounts receivableaccounts payable


While there has been a lot of talk about end-to-end financial supply chain solutions, few systems really live up to the hype. Some companies have chosen to cobble together a number of systems, and some banks are partnering with third party providers to provide a complete end-to-end solution for receivables and payables management, payments and financing.

These banks are looking to technology partners to provide the electronification of payables and receivables documentation and information flow, and then the bank provides the payments and settlement piece, plus access to financing for both supply chain finance  programs and trade finance  needs.

Apr 20

Automation, new bank models drive trade finance

Posted by dbedell in trade financerisk managementOpen AcocuntLetters of Creditfinancial supply chaincash managementCash


As trade counterparty risk increased and liquidity became scarce during the global economic slowdown, many companies revamped their trade finance tools in order to better manage that risk and ensure the smooth flow of goods internally and externally for global operations. Traditional risk-mitigation tools, such as letters of credit (LCs) and agency guarantees, once again grew in popularity for trade within both developed and less-developed countries, as we pointed out here . In addition, corporates generally invested more in software tools to help control trade documentation and trade finance management.

But the biggest changes have been made on the banking side, as financial institutions increasingly recognize that trade finance desks can no longer operate in a silo. Many banks have reorganized their trade finance functions to integrate them with cash management, payments, and collections in order to help companies manage their supply chains from end-to-end.

Mar 16

Banks soup up payments and invoice management

Posted by dbedell in supply chainpaymentsfinancial supply chainCashbiztechaccounts payable


Paper-based invoicing and payments have long been an albatross for the US corporate banking market. Even when companies wish to move to electronic management of A/P and payments processing, suppliers continue to want or require paper-based solutions.

But banks and other servicers offering best-of-breed systems to their clients – either built in-house or through white label offerings from other providers – are trying to make electronification of the corporate purchase-to-pay and supplier order-to-cash cycles more alluring.

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