Why the Future of Supply Chain Finance Has Never Been Brighter – Our Outlook for 2017

As 2017 gets underway, it’s become clear that change is the order of the day. It’s important that we focus on the positive changes around us. There are bright spots of growth across markets and industry. We’re seeing radical innovation and a challenging of the status quo. In this regard, disruption can be a remarkable thing.

Whether it’s bracing for economic impact or funding innovation, change and disruption are driving companies to seek new ways to access liquidity. For some, commercial-based lending has become a less attractive and feasible option – and that’s turning more companies on to the power of supply chain finance.

In a late-2016 study conducted by Global Business Intelligence, one out of five companies surveyed used supply chain finance. The same study indicated that 25 percent of respondents expect to finance at least 10 percent of their receivables through some sort of early-pay finance program within five years.

To meet the demand side of the equation, new supply chain finance providers (many bank-affiliated) and technologies (distributed ledgers, for example) are quickly emerging. At PrimeRevenue, we view these developments as positive. They validate the do-good mission of supply chain finance – to help companies unlock the working capital trapped in their supply chains so they can grow – and the vast need that exists in the market.

They also underscore the importance of experience and longevity in a market that’s attracting new entrants. The TEAM at PrimeRevenue fully understands the complexities of accomplishing the mission at hand and why, as a provider, it’s important to have a multi-funder, bank-agnostic approach. No one bank can meet the liquidity requirements of a truly global supply chain finance program – not in the best of economic conditions and certainly not in these more challenging times.

I believe the supply chain finance market is entering a fast-growth cycle in 2017 for several reasons:

First, more companies are using it to mitigate supply chain-wide financial risk. Companies are realizing how it can benefit not just their business but their suppliers’ businesses as well. Amid geopolitical and economic turbulence, you can’t put a price tag on confidence in supplier health.

Second, we’re seeing unprecedented interest in PrimeRevenue’s supply chain finance platform and services. Last year, more than $100 billion in supply chain transactions were processed on PrimeRevenue’s platform. We now boast more than 20,000 customers in over 70 countries and added 3,500 new suppliers to the platform in 2016. We’re also seeing significant growth in key sectors such as retail, food and beverage, energy and consumer products. This unprecedented growth allowed us to average over $150 million in early payments per day for suppliers on our platform in December.

We have also attracted new partners such as SAP Ariba. PrimeRevenue and SAP Ariba have teamed to transform the financial supply chain. Through integrated source-to-pay processes and technology, we are enabling buyers and suppliers to connect the dots between procurement and finance and provide the visibility needed to optimize relationships and cash flows.

One side effect of this prosperity was outgrowing our North American headquarters. Having exceeded the capacity of our current space and with departments scattered across multiple floors, we moved to a larger space in the second half of last year. With more space to grow, we can support the growth plan we set forth in April 2015 when we raised $80 million in a financing round to help us accelerate customer acquisition and solution innovation.

This growth has also led to PrimeRevenue receiving a number of prestigious awards over the past year, including:

• INC 5000 Fast Growing Companies (5th year in a row)
• Global Finance Magazine, World’s Best Supplier Finance Providers Awards: Michelin and PrimeRevenue Jointly Recognized for Innovative, Highly Effective Supply Chain Finance Implementation
• Global Trade Review, Company with the Best Supply Chain Finance Platform (6th year in a row)
• Global Finance Magazine, Best Customer Implementation of Supply Chain Financing Solutions: PrimeRevenue/AGCO
• PrimeRevenue and SABMiller were jointly recognized by the SCF Community Forum in the FMCG, Food and Beverage Category
• TMT News, Trading Platform of the Year

Perhaps better than any of these, one of our new clients successfully generated more than $750 million in free cash flow in the fourth quarter of 2016. They used the funds to pay down debt, and received a ratings upgrade from Moody’s as a result! How’s that for enormous value added?

Lastly, we are incredibly optimistic because of the TEAM we have in place at PrimeRevenue and the customers we serve. Our customers and their suppliers tell our story for us. For some, it’s about finding the liquidity to fund a new competitive initiative. For others, it’s about taking a business idea and turning it into a full-fledged plan of action. And, for some companies, it’s about improving cash flow so they can weather the unexpected.

This is why the people that work at PrimeRevenue do what they do. Some of us are fintech wonks and lots of us are finance nerds. But we all value our role helping companies grow, transform and thrive.

There is no doubt that 2017 will bring about change that will prompt more companies to turn to supply chain finance. Whether it’s about mitigating risk or achieving growth (or both), we are excited to be a part of the solution.