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Working Capital Insider: SCF as a Critical Liquidity Tool for Suppliers

 

By • Published July 16, 2020 • 4 minute read

Liquidity is essential for businesses to innovate, maintain operations, and invest in growth. However, the recent economic landscape has many companies – particularly smaller suppliers – in a cash flow crunch. In this Working Capital InsiderTM video interview, Nyerere-Jamal Richmond, PrimeRevenue’s Director of Supplier Engagement for the Americas, explains why suppliers are turning to supply chain finance as an alternative source of cash.

Tom Roberts:

Welcome back to another edition of the Working Capital Insider™. I’m Tom Roberts. I’m the Global Head of Marketing for PrimeRevenue and I have the pleasure of being joined today by Nyerere-Jamal Richmond who heads up all of our supplier engagement. Welcome, Nyerere.

Nyerere-Jamal Richmond:

Hello, Tom.

Tom Roberts:

So first question, Nyerere, is how long have you been here doing the good work of supplier engagement?

Nyerere-Jamal Richmond:

I’ve been with PrimeRevenue for seven and a half years. I started in December of 2012.

Tom Roberts:

And as y’all who are watching can see, behind Nyerere is our headquarters, which we just moved into in early 2020 in Atlanta. We just moved into that office space and we’re starting the process of slowly going back into the office starting this week and next week, because we’re still in the midst of the global pandemic. Speaking of which, Nyerere, that’s having an effect on liquidity globally. From your vantage point, what are you seeing in terms of how buyers and suppliers are responding to the liquidity crisis?

Nyerere-Jamal Richmond:

That’s a great question, Tom. What we’re seeing from our buyers is that they’re offering supply chain finance to more of their supply chain to help strengthen and support their suppliers. They’re even offering it to suppliers without a term extension. What this does is gives their suppliers access to an additional stream of liquidity. From our suppliers, we’re seeing multiple changes. When suppliers are joining the program, they’re far more engaged and they’re asking forward-thinking questions. They’re providing the documentation sooner and they’re really thinking about how this cash is going to impact their business.

Tom Roberts:

So does that mean suppliers are moving more quickly to take advantage of programs when they’re onboarding?

Nyerere-Jamal Richmond:

That’s correct. Not only are they moving more quickly, Tom, they are also using all of the tools available to them. They understand that right now, cash is more important than ever. And they view this as, basically, a pool of low-cost, on-demand capital they can access at any time they need it.

Tom Roberts:

So that’s about suppliers that are coming on to programs and joining. We have tens of thousands of suppliers, many of which have been around with us for many years. How are they changing their behavior?

Nyerere-Jamal Richmond:

Well, that’s another good question, Tom. What they’re doing is that they’re actually using more of the tools that are available to them. A lot of suppliers who have been on the system are using our AutoAdvance feature for the first time. What they’re doing is they’re setting payments that happen automatically. What that does is it makes their payments sum and date certain so they know exactly how much they’re going to get paid and when they’re going to receive payment. Also, they’re using the tool that makes sure that invoices are approved in timely manner. So they can look in a system, see when things have been approved and how much has been approved. And if they have a question, they can address it with their buyers sooner rather than later.

Tom Roberts:

Can you talk to me a little bit about magnitude of cash flow we’re talking about that can be unlocked for these suppliers?

Nyerere-Jamal Richmond:

Last year alone, Tom, PrimeRevenue processed well over $250 billion in payments through our system. And also normally, in a normal market, 70% to 80% of the invoices in the system are accelerated. In the month of March, 93% of the invoices loaded into our system were accelerated for early payment. That’s a huge increase.

Tom Roberts:

All right, thank you so much, Nyerere, for taking some time to talk to me about this. I appreciate it.

Nyerere-Jamal Richmond:

Thank you, Tom.

Tom Roberts:

And for all those of you who are watching, thank you for your time as well. Be sure to check our website, our LinkedIn profile, and then also now our new YouTube channel for additional content like this. Thank you very much and be safe.