Founder, Vice Chairman and Chief Strategy Officer GT Nexus
What exactly does the term 'financial supply chain' encompass? Can you explain the emergence of this term and its popularity in the current scenario?
Financial supply chain refers to capital and liquidity across the supply chain. A growing number of companies are recognizing the supplier-related risks that stem from capital constraints. For a long time, suppliers were being beaten down on price AND on payment terms. This resulted in suppliers struggling to survive. The potential impacts of a supplier going out of business or of being late on an order have been well documented recently. Some companies have recognized the need to partner with suppliers - taking the approach that "my supplier is an extension of my business" - and taking steps to ensure their financial health. Several programs are available today, such as early payment programs that give suppliers access to payment within days. These programs not only remove time from the payment cycle, they also remove capital costs. When the buyer, supplier and finance provider are tied together on the same network, the finance provider can offer financing to the supplier based on the credit strength of the brand or retailer.
How can cloud based platform help in the financial supply chain?
Cloud changes the game in the financial supply chain by providing that network of connectivity upon which documents, data and payments flow with complete transparency to the buyer, seller and finance provider. Cloud removes the technology burden that often comes with global trade and supply chain solutions. A supplier can connect using just an internet browser. But that simple connection provides visibility into orders, access to financing and a clear view into payments to know exactly when payment will arrive. For suppliers, it means a healthier business that can plan for growth. For buyers, it means less risk and lower capital-related costs in the supply chain.
Manual financial processes and inefficient use of working capital has resulted in tremendous capital been stuck in supply chains by companies. How can that capital be liberated?
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