Managing Supply Chain risk

If your business lost a key customer, what impact would it have? Now, consider the question in reverse – if you lost a key supplier, what impact would it have on your business? Most businesses are as reliant on their suppliers as they are on their customers. Managing risks associated with your supply chain is imperative to your business success.

When it comes to risks arising from your supply chain, there could be many:

• Commercial risk – what would happen if your supplier supplied you with faulty or sub-standard goods that were incorporated into your product? The quality of your product would be compromised, possibly leading to commercial loss.
• Reputational risk – do any of your suppliers utilise child labour (for example), thus implicating your business in an unethical endeavor?
• Regulatory risk – akin to reputational risk, activities can be outsourced, but responsibility cannot. What impact does your business suffer if one or more of your suppliers operates outside regulations?

The greatest risk to your business is “resilience” – what would happen to the continuity of your business if one or more key supplier’s businesses was interrupted or failed? The implications to your business could be compromised production, stretched lead times, cashflow issues, and/or damage to business goodwill and reputation. Consider the impact of late supplier payments on not only your credit score, but your reputation with suppliers. Delayed supplier payments can impact your ability to raise finance, obtain insurance, attract quality supplier businesses, or win your next big contract. With variable and unreliable customer payments of your own, what tools can you use to manage payments to your suppliers so that your business doesn’t suffer?

Supply Chain Finance is the solution to this risk.

Our facility provides your suppliers with a cash flow tool that enables them to take payment for invoices when it best suits their business. In addition, our facility also allows you to extend your payment terms back to us by up to 90 days from the date of the invoice. In effect, your suppliers and you each benefit from a cash flow tool, without any detrimental impact to anyone – it’s a clear win-win situation.

The benefits of a Supply Chain Finance facility are:

• Your supply chain is strengthened, ensuring certainty of supply, in turn strengthening your business.
• Your reputation with suppliers and customer is enhanced – by never paying a supplier late you can become a customer of choice with your suppliers. Compared to your competitors, you are a preferred customer.
• By avoiding supplier payment issues, your credit score is enhanced. Your borrowing capacity and ease of obtaining credit improves.
• By financing your supply chain, you reduce your working capital requirements. Those funds could be redeployed into marketing and/or product development, thus increasing your sales and revenue.

Benefits specific to our Supply Chain Finance facility are:

• Unsecured and off-balance sheet – a credit fund for you to draw on to make supplier payments.
• We can pay suppliers on COD terms, including overseas suppliers, and we can fund 100% of a deposit on overseas supplies.
• Clients benefit from a rebate when suppliers take an early payment.
• No lock-in contracts, operates on an invoice-by-invoice basis.
• Simple supplier online activation – no wet signatures needed.
• Suppliers have access to 100% of their invoice value, minus any early payment discount.
• Suppliers have the flexibility to select payment date that suits them, rather than fixed periods.

There are many benefits of utilising our Supply Chain Finance facility – from reducing risk to your business, to releasing funds locked away as working capital that could be redeployed to build your business.