How To Overhaul Supply Chain Finance

Cash is king, the saying goes, and firms almost always want more — and they would love to have it more quickly.

To that end, Taulia, which focuses on supplier finance, said earlier this month that it was linking up via strategic alliance with KPMG, the United States-based audit, tax and advisory giant, in order to improve supply chain management processes across large enterprises.

In an interview with PYMNTS, Markus “Maex” Ament, chief product officer for Taulia, said that the strategic benefits for the supply chain tech outfit are myriad through linking with KPMG, especially as the firm can now get in front of larger companies, such as those in the Fortune 500 or Global 2000, typically among the client roster of KPMG.

The inclusion of Taulia’s invoicing, discounting and accounts payable automation represents “a new tool in the portfolio for KPMG,” said Ament, and the relationship is a reciprocal one where KPMG is able to help onboard new clients, suppliers and functions, especially across the treasury and working capital management arenas.

Working capital management and especially supply chain finance has gained growing importance since the financial crisis that spanned 2008 to 2009, where, as Ament termed it, “a perfect storm” arose, and large companies began to push out payment terms in an effort to hang on to cash and grow working capital. Since then, technology has accelerated, ever more so with the boom in FinTech that has been a hallmark of only the last few years. “Now,” said Ament “it’s possible to onboard suppliers in just a matter of seconds.”

Such speed to load new entrants onto the supply chain means that the global aspirations of larger companies and where they want to extend reach can transpire regardless of languages or regulatory environment. Indeed, continued Ament, some of the most highly regulated industries may find the joint efforts of Taulia and KPMG especially timely, given the environment that, say, a manufacturer or even utility may face — and one that can be aided by the regulatory sources, across anti-money laundering and “know-your-customer” initiatives.

And yet, as has been seen across industries and especially in the B2B world, paper rules. Paper checks. Paper invoices. Both are addressed directly by Taulia’s eInvoicing and supplier discounting products, said Ament, and the opportunity is a large one, where “even in 2016 and even in the United States, roughly 70 percent of invoices are still done by paper, fax and paper checks, even where there is the option to use something simpler and faster, such as ACH.”

Adopting eInvoicing, said the executive, means that companies can increase accounts payable efficiencies, eliminating the time it takes to approve invoices, which under the hoary methods of using dead trees can stretch to 10 days or more. Taulia has found that 47 percent of suppliers are paid late, and KPMG’s own research shows that a minority of buyers — at less than 30 percent — offer supplier finance programs.

As companies, especially in the U.S., where Ament says that as much as 20 percent to 25 percent of spend is going cross-border, “enhanced discounting” can help speed time and efficiency across the supply chain, while also saving money. That’s on a sliding discount scale, where earlier payments, logically enough, get higher discounts.