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Welcome
Susie West
Founder and CEO
sharedserviceslink
Leela Gill
VP Operations
Direct Commerce
Tom Glassanos
President
Bavelos Group
Questions
• Send me your question early
• Use this opportunity to get the answers/info you seek
• The sooner you send me the question, the more likely it will
be asked
• Remember to stay on for Q&A in the last 10 minutes of the
show
Agenda
• Context and overview
• 10 secrets
• Conclusion
• Questions
Context
• Enterprises continue to ignore an easy way to ‘make
money’
• Companies like The Coca-Cola Company, Lowes, Costco
and Pacific Gas and Electric are saving 0.5% back on all
spend… $ millions in savings per year
• Rule of thumb: You should be achieving $5M in savings and
$250M of cash per billion of spend
• These companies are actively doing supply chain financing,
and they’re doing it well. Let’s find out how they’re doing it
Overview
• Supply Chain Finance – allows you to extend net terms with
suppliers to increase cash
• Early Pay Programs – uses your cash to capture early pay
discounts from suppliers. Two common strategies:
– Terms Optimization
– Dynamic Discounting
• Buyer Initiated Purchase Cards (BIP) – A method for paying
supplier invoices via card to earn rebates and gain 30 days
DPO
Build consensus with the three amigos
• This refers to the buy-in that’s needed to get from
concept, to implementation, to project success
– Accounts Payables
– Procurement or Sourcing
– Treasury
• Early engagement is critical
• Then you need your senior champion
Extend payment terms first but watch your corporate philosophy
• It’s advisable to look at extending your terms with your
suppliers first
• Now is a good time to introduce a ‘payment term
strategy’
• Stay fair and stretch ethically
Know your cash appetite
• Do you have sufficient cash to capture discounts?
• What rate of return would make this attractive?
• Your own money or third party money?
Poll 1 Poll 1
Bake program terms into your new contract
• Bake the details of your early pay program into the
terms and conditions of your contract as standard
• ‘Start the clock’ on the sliding discount from the date
of invoice receipt
Get your enablers right
• Your purchase to pay process needs to be streamlined, efficient,
and supporting a high percentage of first time match rates
• You need a platform of enabling technology that can automate
the flow of transactions from invoice receipt to invoice payment.
And this means implementing tools like:
– Supplier portals
– Electronic invoicing
– OCR/Data Capture/Hosted images
– Auto-matching technology
– Workflow
Poll 2
Apply discounts to as much spend as possible
• It’s better to go for 100% of your spend and
capture 50%, than negotiate on 10% of spend
and capture 100%
Poll 3
Think about having ad-hoc offers
• It is good practice to have ad-hoc offers in your
program, which can be applied at certain points of the
year when cash is more desirable
• For example, end of year
• When analysing your suppliers, be sure to familiarize
yourself with their financial year
Micro-target your suppliers
• Beginning an early pay program is a good opportunity to evaluate
your vendor database
• Whilst managing this process, there is a great opportunity to look
forensically into the financial health of each supplier, and
segment them according to their credit rating, days paid
outstanding, balance sheet and other factors
• From this data-gathering exercise you will be able to determine:
– a) how you will initiate each supplier onto your early pay program
and
– b) what level of discount will be set for each supplier
• Make sure your rates remain comfortable – suppliers have other
financing alternatives - don’t ‘price yourself out of the market’
Get your measures in place
• Your discounting rates or early pay rates need to be captured,
assessed, measured, interpreted, and reported on
• If a month is low on negotiated discounts captured, find out why
• If there was an excess in discounts applied for, or taken, find out
why
• If one supplier continues to take high rates, find out why
• Measuring negotiated discounts captured is so vital, as un-
captured discounts can represent lost savings for your program
– What % of your spend have you negotiated discounts on?
– What % of negotiated discounts are you capturing?
– What is your average discount rate?
– What is your average cost of capital?
– What is your average DPO
Your ERP doesn’t provide the solution
• SCF functionality is not included in your standard ERP
package. This means you need to look outside your
ERP (SAP, Oracle or other ERPs) for this functionality
• All leading early pay tools are system agnostic, and
install-light, only requiring a limited number of IT man-
days to implement
• Most of these tools are SaaS based, and the training
event is brief, as the tools are so intuitive
Conclusion
• Should you apply all these best practices, you
have every reason to reach:
$5 million
savings for every billion USD of spend
Questions
Contacts
For more information contact:
• Tom Glassanos: [email protected]
• Leela Gill: [email protected]
Dynamic Discounting Summit
Register by emailing
Is only $999 But for attendees of this
webinar we are offering 5
tickets at
$899
Only a few places left!
Upcoming webinars
Jan 27th Feb 23rd
Conclusion
• xxx