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Supply Chain Finance: Why should treasury sit in the driver’s seat?

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Presenters

Tapani OksalaSolution Manager SCF

Tuomas UnholaHead of Financing Product Line

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Agenda

1

2

3

Supply Chain Finance from Treasury's point of view

Modern SCF-solutions cover multiple different business objectives

Cross-functional win-win-win situation

4 Q&A

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Supply Chain Finance is a “financing” program initiated by the buyer for it’s suppliers to

receive early payments.

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Fulfilling the needs of both buyer and seller

Supplier decides when to receive the payment

Early payment Existing term New term

Supply Chain Finance Program

Buyer negotiates extended payment terms

Early payment Pay later

Delivery Acceptance Payment

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Current environment

Strict RegulationsGlobalization Payment terms Interest rates

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Company’s goals

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Role of Treasury

Cash Forecasting

Working Capital Management

Cash Management

Funding and Capital Markets

Financial Risk Management

Stakeholder Relations

Treasury steering the way

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Modern SCF-solutions

Reverse Factoring Dynamic Discounting Cash flow, working capital, impact on balance sheet

Margins, investment opportunity, impact on profit & loss statement

Extended payment terms, while offering early payments to suppliers

Early payment discounts to suppliers

Approximately 1-4% per annum

Approximately 5-30% per annum

Third party funder (banks, non-bank funders)

Buyer’s balance sheet

Large and medium enterprises Small and medium enterprises (SME’s)

CORPORATE GOAL

HOW

AVERAGE DISCOUNT

FUNDING SOURCE

SUPPLIER FOCUS

Reverse Factoring and Dynamic discounting in same solution• Flexibility to utilize both solutions as business needs may change

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Modern SCF-solutions

• No Restriction on number of Funders– Self funding– Fund based funding– Bank funding

• Liquidity sustainability– New funders for liquidity shortfalls

• Minimum impact on credit capacity• Competitive margins

Multi-Funder setupAs easy to connect to multiple Financial institutions as to one bank

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Modern SCF-solutions

• Regional funders• Multi currency support• No geographical limitations• Support for different time zones • No restriction on number of suppliers

Global reachGlobal supply chains, maximum number of suppliers on board

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Modern SCF-solutions

• Streamlined supplier onboarding• Optimized payment term extensions• Optimal supplier selection• Cash flow predictions• Ideal margins for early payment discounts

Toolkit for successful SCF programWorking Capital affect is realized after the payment term negotiations

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Cross-functional win-win-win situation Cooperation between all key stakeholders

Finance

Treasury

Procurement

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Head of treasuryEnsure adequate funding

• Improve working capital & cash flow

• Options to provide “income stream”

• Multiple funding options

• Bank strategy – Non bank financing

• No liquidity shortfalls

• Risk management

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CPOEnsure purchase continuity

• Extend payment terms

• Savings and cost avoidance

• Increases the value of Purchasing

organization

• Reduced supplier (supply chain) risk

• Social responsibility & Innovations

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CFOEnsure business continuity

• Working Capital effect

• Discounts from the purchase prices

• Bringing Procurement and Finance

closer to each other

• Streamlined Purchase to Pay

process

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Summary

1. Supply Chain Finance has many touchpoints to Treasury's daily tasks

2. Modern technology will provide a toolkit which solves multiple different needs

3. Leads to Cross-functional win-win-win situation

Start talking to other departments now

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Sell More Pay SmarterBuy Easier

Setting OpusCapita apart