Forex foryszewski
Get access to all our content — subscribe today 30 day free trial. Automating the financial supply chain is essential in a world forex credit is tight, raw material prices are rising and demand is shrinking. But the ideal solution depends on more collaboration between buyers and sellers. By Jack and Wolfi Large. The guide to Technology in Treasury Management Companies will only be able fully to automate the financial supply chain if they are prepared to integrate their business processes and systems. Collaborative business commerce, described in Figure 1, is the way forward, with companies working together to achieve their goals of controlling costs, increasing sales, minimizing risk, and optimizing liquidity and working capital management. The pressures from the decline in customer demand around the world, increases in the price of raw materials and the lack of availability of credit are making it absolutely essential for senior management and corporate treasury to focus on automating the financial supply chain wherever possible. Established financial supply chain and working capital management technologies and services are being installed at unprecedented rates as companies attempt to maximize their cash flows, reduce their inventory and accounts receivables, extend their payment terms for the goods and services they purchase, and minimize debt. Banks and other financial service suppliers are attempting to meet the need for automation, launching new platforms and services and upgrading existing products and services. But this is unlikely to be enough. Companies are already having to collaborate to ensure the financial health of not only their own supply chains but those of their suppliers. Collaborative automation is fast becoming necessary for companies to survive in the current economic climate. All the necessary pieces for automating the financial supply chains of companies operating in the Single Euro Payments Area SEPAa politically-led collaborative initiative, are slowly being put into place. The single currency is well established, SEPA Credit Transfers and Direct Debit payment systems for domestic and cross-border transfers will hopefully be fully operational bythe ISO e-invoicing message standard has been published and in July the directive to harmonize VAT treatment of all invoices in Europe was approved. A green paper by the European Commission on the future of value added tax VAT collection, examining the possibility of VAT payments split between governments and merchants eliminating the process of VAT returns, has also been published. The vision for the Digital Single Market, encompassing a single currency, SEPA payment systems, a single invoicing standard and a single VAT system throughout the region, offers real cost savings, particularly for smaller companies. Also the split payment proposal for VAT collection will minimize fraud. There are still some problems to be overcome for e-invoicing to become really widespread, including the fragmentation of the e-invoicing industry and the lack of willingness on the part of some suppliers to enrol in provider networks. But there are and, for the foreseeable future at least, will probably continue to be hundreds of e-invoicing service providers the European Commission estimates there are more than in Europe alone so the automated exchange of e-invoices that has begun, though volumes are growing very slowly, will need to proliferate for real penetration. The biggest problem for service providers is supplier enrolment. It is relatively easy to enrol large companies on their networks. The problem is the failure of the hundreds and thousands of small companies, which supply goods and services to the large companies, to join. All the providers have web-based input enrolling services, the real difference seems to be in whether they have large customer service desks to chase and encourage companies to join. Stefan Foryszewski CEO at OB10 believes, "Supplier enrolment is critical for the success of any e-invoicing project. One is more visibility forex receivables, enabling it to focus its efforts on collecting the payments for outstanding invoices. Another, with approval of e-invoices typically taking a mere two to four days compared to foryszewski 20 or more required for a paper invoice, is the opportunity for dynamic discounting. This is perhaps a good incentive for smaller companies to join e-invoicing networks. Pollenware uploads payables the buyer wants to offer for early payment on to the QuickPay supplier portal. Those suppliers taking part gather online at a set date and time and enter the percentage discount they are prepared to offer for early payment. The QuickPay system indicates to each supplier the risk of being out-bid and it has the opportunity to increase its original bid. The buyer is shown all the bids as both a percentage discount and an APR discount, based on the number of days foryszewski invoice will be paid early. If the bids are attractive the buyer can increase the amount of cash available for the auction. At the end of the designated time the buyer chooses which discounts to accept in return for early payment. The auctions take very little time to set up and clients offering dynamic discounting for early payment have found more suppliers prepared to participate in an auction than other more standard discount schemes. DuringPollenware clients earned an averaged a We believe that our Optimized Collaborative Auction Platform is the future of dynamic discounting programmes. Ariba is now using statistical evidence from its sourcing and procurement services to identify industry sectors and types of company likely to accept dynamic discounting. For cash-rich companies, dynamic discounting offers the most flexible and highest returns on surplus cash, if only their suppliers can be persuaded to accept less in return for early payment. E-sourcing and e-procurement are now well established in many companies, with all the departments involved using automated systems to source and procure goods and services. In several new products and product enhancements were launched to make sourcing and procurement more efficient and to enable greater forex between buyers and suppliers. Searching for a suitable supplier can take a considerable time, sometimes a month or more. Google searches can throw up impossible numbers of options to research in any detail. Over the years Ariba, an e-commerce company providing e-procurement, e-invoicing and working capital management services with a global network ofbusinesses, has been asked by many of its large MNC members whether it could search for suitable suppliers on the network. In response, the Ariba Discovery service, launched two years ago, automatically matches buyers with suppliers based on their needs and capabilities across more than categories. Companies using the service have found that sourcing the goods and services they require is now typically taking only four to five days. The service encourages buyers to include purchases often left off spend management systems by making it easy to requisition items across all spend categories, so improving spend coverage. Though automating sourcing and purchasing is important, purchasing compliance is vital, as the elimination of contract leakage remains one of the single most cost-effective savings a company can achieve. All the global network banks offer some form of integrated trade platform incorporating working capital and supply chain management as well as various financing services to create end-to-end solutions. Citi recently launched two new services for exporters. The Trade Document Outsourcing service enables clients to centralize the preparation of their export documents with Citi, which then acts as a full outsourcing centre, managing the flow of documents, ranging from letters of credit to documentary collections to open account payment terms. Beneficiaries submit their letters of credit documents electronically via the service, a web-based imaging platform that enables documents to be posted on a secure website for review rather than having them physically transported to and fro. To speed up trade document flows RBS recently added DigiSuite to the MaxTrad Network. Figure 1 - MaxTrad Network. Financing the supply chain has become even more important as liquidity, or more accurately the lack of liquidity, continues to cause problems. Over the past year there have been several enhancements to existing products and services, and one major new development. Supply chain finance, or reverse factoring as it is sometimes known, is now well established world-wide. Large companies have come to understand how it can be used to provide their smaller suppliers with a cheap source of liquidity, though some large companies also benefit by extending their payment terms. In many cases, the interest rate the suppliers obtain is not particularly low, but some are still keen to receive their cash considerably earlier than they otherwise would. One of the biggest problems in supply chain finance, as in e-invoicing, is the enrolment and implementation of the suppliers. Over the past 12 months the banks have all been automating the enrolment process. Identifying opportunities to reduce days sales outstanding and to automate key processes in the financial supply chain has always proved difficult. And new ways for reducing days sales outstanding are also emerging. The Receivables Exchange in the US provides a centralized and transparent electronic marketplace enabling companies to sell their receivables directly to institutional investors in a real-time, competitive auction process. The seller uploads the receivable invoices for sale and sets up the auction, specifying the closing date, the minimum advance and the maximum fee it is prepared to accept. The seller also has the option of setting a buyout price, which will win the auction instantly similar to the Buy it Now option on eBay. The auction is posted online where buyers are able to check the background of the seller and can see details of all the invoices. The bidding process, shown in Figure 2, enables buyers to estimate how competitive their bids are and the seller to monitor the auction in progress. An auction typically takes less than 24 hours, sometimes less than two hours. Nic Perkin, co-founder and president of The Receivables Exchange, claims, "On the exchange, companies are lowering their cost of capital and shortening their days sales outstanding to one day while maintaining complete control of their relationships. Putting together new combinations of existing products and services seems to be the future of financial supply chain management - for example, using a combination of the purchase card, dynamic discounting and supply chain financing. Auctions also seem to be playing an increasingly important role. But until there is more collaboration between buyers and sellers and more automation of the processes involved, companies can only dream of the ideal financial supply chain solution. To receive more FX stories, please sign up to our alerts. The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. All material subject to strictly enforced copyright laws. All sections Search Search Search Euromoney Search. If you're happy with cookies, continue browsing. Technology in Treasury Management: Financial supply chain review By: Jack and Wolfi Large Published on: Wednesday, March 02, Automating the financial supply chain in SEPA All the necessary pieces for automating the financial supply chains of companies operating in the Single Euro Payments Area SEPAa politically-led collaborative initiative, are slowly being put into place. Automating sourcing and procurement E-sourcing and e-procurement are now well established in many companies, with all the departments involved using automated systems to source and procure goods and services. Automating the trade cycle All the global network banks offer some form of integrated trade platform incorporating working capital and supply chain management as well as various financing services to create end-to-end solutions. Figure 1 - MaxTrad Network Source: RBS Exporters can use MaxTrad DigiSuite for electronic document preparation and presentation in real time. RBS checks the documents for discrepancies and informs the exporter, which then either accepts the discrepancies or submits revised documents. Foryszewski condenses the time-frame for the submission, review and delivery of clean documents considerably. The Receivables Exchange The buyers are regulated financial institutions and there are now 80 buyers on the exchange including hedge funds and banks. The sellers are companies with business operations in the US. There are 1, sellers on the exchange, the majority medium-sized companies and SMEs but there are also some large multinationals. The Receivables Exchange charges both buyers and sellers. The future Putting together new combinations of existing products and services seems to be the future of financial supply chain management - for example, using a combination of the purchase card, dynamic discounting and supply chain financing. MOST READ FOREX Bank of America Merrill Lynch delivers greater liquidity through MOEX connectivity. The guide to Technology in Treasury Management.
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