Top 5 Considerations When Choosing a Supply Chain Finance or Dynamic Discounting Solution

In order to select the best supply chain finance (SCF) or dynamic discounting solution for your company, there are a few key questions you should ask that will help ensure successful, long-term results.

1. Global solution and platform

If you’re reading this, there is a good chance that your company is a multinational company with customers around the world, a global supply chain, and a diversified product portfolio. Successful global sourcing requires a supply chain finance solution that can be deployed in multiple languages and currencies, with well-established supplier onboarding capabilities and a support team that can help your procurement team in the Americas, Europe, Africa and Asia Pacific.

It is also critical to partner with a SCF provider who shares your global vision. PrimeRevenue provides supplier onboarding and financing support in European, North and South American, Australian, African, Asian, and Middle Eastern countries. PrimeRevenue onboards suppliers, partners with clients in all major languages, and currently supports over 20,000 buyers and suppliers located in over 70 countries with the ability to receive financing in over 30 currencies across multiple vertical markets.

2. Multi-funder flexibility

If you are looking to start a supply chain finance program financed by a bank, you should consider an important aspect: funding is uncommitted. This means that a financial institution can reduce its funding, increase pricing or in the worst case, even stop funding. The last scenario is not purely theoretical, it happens quite often.

In order to mitigate these risks, it is crucial to look for a supply chain finance platform that allows you to add, change or replace funders, such as PrimeRevenue’s multi-funding supply chain finance solution. A multi-funder solution will allow you to easily add banks as you grow your supply chain finance in terms of funding size and geographic spread.

3. Combining self-funding and third-party funding

You may be considering dynamic discounting as a way to offer your suppliers early payment, or even self-funding your entire program. While these may seem like attractive options, PrimeRevenue strongly advises that your solution provides the flexibility to include outside sources of funding as well.

While your company may experience a surplus of cash today, things can and do change. Interest rates may rise and/or your company’s objectives may change. The political landscape, such as the recent Brexit decision, could also wreak havoc on interest rates. Despite any setbacks, one thing will remain the same:  your suppliers will continue to depend on early payment options. As a result, even if you decide to use your cash for other purposes, it’s crucial to have the flexibility to invite external third-party funders to ensure the continuity of funding.

4. Supplier onboarding capability

PrimeRevenue understands that your relationship with your suppliers is key for the success of your dynamic discounting or supply chain finance program. PrimeRevenue is the only provider in the market who has created specific solutions around efficiently educating, onboarding and registering suppliers to the platform as fast and easily as possible. This is key as some suppliers may be hesitant to join the program as they have limited information of the procedures and benefits.

There are big differences between what various solution providers offer to make supplier onboarding faster and easier for your suppliers. Some of them leave it to a client’s procurement team (who by the way, also needs to be trained), and others send simple PowerPoint presentations to the suppliers which leaves them confused and unsatisfied.

PrimeRevenue takes onboarding and enablement very seriously but makes the process very easy for suppliers through the use of dedicated web-based tools and specialized local onboarding teams. The results are striking in terms of the ramp-up of your dynamic discounting or supply chain finance program, drastically reducing the effort and time required from your procurement team to bring your suppliers onboard.

5. Analyzing your suppliers

It is common for large buying organizations to have multiple payment terms with their suppliers. Since no individual supplier or supplier group is the same, you should look for a platform that can offer significant flexibility for your supply finance or dynamic discounting program. That said, how can you best determine what terms are appropriate for each supplier or group of suppliers? If you wish to improve your working capital with supply chain finance, you must first determine ideal payment terms for your suppliers. With dynamic discounting solutions, you should consider how you can best maximize your cash discount with your funding of early payments to your suppliers.

Analysis of each of your suppliers is the starting point for every successful supply chain finance or dynamic discounting program. It allows you to predict what your organization can achieve in a set timeframe, and can ensure a seamless implementation with the right terms applied for each supplier which in turn increases good supplier relationships and maximizes your results.

There are several ways providers can address this challenge. While most use a simple spreadsheet, or leave the task purely to the client’s procurement team, PrimeRevenue uses a dedicated system backed by a vast database, which can include thousands of suppliers in various countries, all of different sizes and industries. These solutions include benchmark data on terms applied in different regions, sectors, or even applied by your competitors. These “big data” solutions support procurement and sourcing by helping you apply the right terms to each supplier and deciding where to start deploying the program to generate the fastest results.