Clx   Presentation Short Version Clx Eng   May 2010
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Clx Presentation Short Version Clx Eng May 2010

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Benefits of implementing Reverse Factoring or Supply Chain Finance initiatives between Buyer organisations and Suppliers....

Benefits of implementing Reverse Factoring or Supply Chain Finance initiatives between Buyer organisations and Suppliers.
Implementation process and collaborative platform are also described in the document.

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Clx   Presentation Short Version Clx Eng   May 2010 Clx Presentation Short Version Clx Eng May 2010 Presentation Transcript

  • Dematerialised & collaborative Supply Chain Finance solutions May 2010 Fabien Jacquot Confidential Information - Corporate LinX SAS
  • 1 – Presentation CLX Confidential Information - Corporate LinX SAS 2 2
  • An introduction to CLX • CLX is an independent French organisation (SAS) with a UK presence, • Created in 2008, with the objectives to: – assist Corporations reduce their operational costs, whilst optimizing their Working Capital performance, – Provide solutions and opportunities to financial organisations. • CLX can address International organisations in bringing functional & financial expertise as well as technical competence to build cost effective programmes, • CLX is providing a unique expertise mixing dematerialised Purchase to Pay (PtoP) transactions and the instrumentation of financial initiatives, • CLX has been spun off from Bottomline Technologies (www.bottomline.co.uk) and if required, can utilise their resources in several regions, • CLX markets its own technical solutions and distributes complementary solutions when required, • A proprietary transactional Portal solution with broad functionalities enabling : – the management of the whole ‘PtoP’ cycle, – interfaces with other systems, – Multi-debtor, multi-banks solutions • CLX is collaborating with several financial organisations in the field of SCF Confidential Information - Corporate LinX SAS 3 3
  • Our positioning Link up all parties allowing for the financing of Supply Chain transactions (not as an intermediary) Supplier Fournisseur Buyer Financier(s) Supplier Confidential Information - Corporate LinX SAS 4 4
  • 2 – Context and constraints in Supply Chains Confidential Information - Corporate LinX SAS 5 5
  • Current situation –> Buyer organisations • Increasing requirement to improve financial performance • Improve cash flow management • Reduce payment terms • Enhance purchasing terms • More requests for early payments emanating from suppliers • Growth in transaction volume to be handled with impact on accounts payable • Long internal validation cycle for supplier invoices • Lack of early visibility on accruals • Rare possibilities to enjoy proposed suppliers’ discounts • Conflictual relationships with supplier Confidential Information - Corporate LinX SAS 6 6
  • Current situation –> Supplier’s organisation • Uneasy and expensive access to short term credit • Requirement/urgency to enhance financial performance • Costly management of account receivable • Increase in overdue invoice payments • Challenging situation with own suppliers • Greater number of suppliers’ bankruptcies Confidential Information - Corporate LinX SAS 7 7
  • Current situations in the Supply Chain - Conclusion • Conflictual relationships between suppliers and buyers; each protecting their own financial situation • Requirements for rapid improvements • Legal enforcement of reduced payment terms in Europe • Suppliers: expensive management of the receivables and frequent late payments • Buyers: late visibility on accruals and increased penalty conditions for late payments • Challenging access to easy and inexpensive credit terms from banks • Increasing number of suppliers bankruptcies impacting buyers organisation (manufacturing, retail, etc) • Solutions need to benefit all parties involved in PtoP transactions => increase in the number of Reverse Factoring or SCF initiatives Confidential Information - Corporate LinX SAS 8 8
  • 3– Options to run Reverse Factoring/SCF Confidential Information - Corporate LinX SAS 9 9
  • Definitions Reverse Factoring: • Settle debt from suppliers against discounts on invoice value. As opposed to forward factoring, financial terms are based on buyers credit terms. Buyers settles with financiers on invoice due date. Supply Chain Finance (SCF): • Financing of the Supply Chain transactions allowing suppliers to demand early payment for validated invoices or other collateral. The Buyer is also implicated as it settles invoices directly to the Financier in due time (or agreed prolonged due time between Buyer and Financier). Note: • Through these 2 approaches, besides improved supplier relationships, the Buyer can enjoy either discount on invoice value, kick back (cash) payments from financial partners or extend its payment time with financiers. Confidential Information - Corporate LinX SAS 10 10
  • What is attractive about Reverse Factoring/SCF? For Buyer organisations, several options are available with varied benefits for all participants. • Reduce debt from suppliers: Enjoy discount as currently offered, Propose discount to suppliers. • (Re-)negotiate credit terms with suppliers, • (Re-)negotiate purchasing terms against early payment option, • Respond to increasing demands for early payment and improve overall relationship in the Supply Chain, • Manage recent legal constraints (Europe), • Manage cash flow with the choice between early payment or using financial partners with potential profit sharing, • Provide an additional instrument for ‘negotiation’ to the procurement team. Confidential Information - Corporate LinX SAS 11 11
  • How do these schemes work? With 2 or 3 participants: 2 combinable schemes • R.F. between 2 parties = Buyer and its suppliers are facilitating early payment against discount on invoice value – Buyer manages and enjoys discounts directly by using its own working capital, – Supplier is being paid early by the Buyer against a discount on the value of its invoice. • R.F. between 3 parties = Buyer involves financial partner(s) to manage supplier financing in using credit terms based on its own credit rating: – Supplier enjoys better credit terms as risk has been reduced for financiers, risk being based on Buyer’s credit rating, – Buyer settles invoices to the Financier on due date (or later), – Buyer can enjoy kick back cash payments from financier(s) part of the programme. Confidential Information - Corporate LinX SAS 12 12
  • Reverse Factoring/SCF with 3 parties 2- Buyer 11 Payment on due date ERP updates to modify payee info 10 1 Information received from ERP/e-procurement solution 2 PO delivery 1 - Supplier 3 3 - Financier PO aknowledgment- OK 7 4 Info delivered into ERP Invoicing 5 Disputes-validation 8 statuts – Payment date Information received into ERP 6 Request or offer for early payment 9 Early settlement Note : this is not an exhaustive representation of all transactions but provides an overview Confidential how such programmes can be on Information - Corporate LinX SAS 13 13 instrumented via a centralised & personalised hub
  • Modules of the transactional portal Financing: Early e-invoice: e-PO: Management via payment/ Creation Receive from financial discount: ERP Control partners Direct Transmission management of Reject Proposed to vendor financing terms the early Send payment vs Acknowledge OK discount Acknowledge ment ment Notified Remittance OK Rejection Advice Dispute Notified management Choice in Rejection payment date Credit or debit note Remittance Advice Confidential Information - Corporate LinX SAS 14 14
  • Why use several financial partner(s)? • Based on the Buyer organisation’s own objectives, using several financial partners can provide : – Competitive financial proposals, – Diversity and size in credit lines provided, – Flexibility in the management of the programme, – Catering for a broader supplier base (geography, currency, vertical, etc). • Financial partners outside existing banking relationships can present multiple opportunities, • Participation from financial partners is managed via the unique Portal enabling greater visibility and control over the programme, • Corporate LinX (not as an intermediary) can facilitate the introduction with financial organisations managing such programmes and offering competitive conditions & credit terms • Several methods can ensure competitiveness and transparency in financial offerings for the benefit of suppliers. Confidential Information - Corporate LinX SAS 15 15
  • 4 –Principles of using a transactional Portal Confidential Information - Corporate LinX SAS 16 16
  • Benefits of using a transactional Portal? To manage such complex initiatives requires a technical solution in the way of a transactional and centralised exchange Portal • All transactions of BU’s involved in the programme managed via a unique Portal • Recuperation of transactions/information from existing internal tools (ERP, e-proc, EDI, e-invoicing, Supplier Intranet, etc) • Central point for all European (& other regions) suppliers • Early visibility on accruals • Management toll (discounts managed directly or financing via financiers) • Choice in usage & business models (license mode ou SaaS mode) • Modular implementation (PO’s, invoicing, early payment, etc) • Programme managed by Buyer organisation • Reporting et centralised archiving for all transactions • Portal adaptable to Buyer’s graphical guidelines • Creation of a supplier network • Management of several financial partners via a unique Portal Confidential Information - Corporate LinX SAS 17 17
  • What is the Portal’s role? The transactional and collaborative Portal manages: • A tripartite relationship between Suppliers-Buyer-Financiers • All dematerialised transactions and audit trails • Respective visibility down to unitary transaction level => shared transaction status • Format conversion between different data formats (in & out) • Information recuperation from Buyer (PO, etc) and from suppliers (Invoice, etc) • Provide updated transactional data once processes have been completed=> Buyer, Suppliers, Financiers • Requests for early payments =>Suppliers • Discount or Financial terms => Buyer, Financiers • Adaptation to Corporate Graphic identity=> Buyer’s Corporate compliance Confidential Information - Corporate LinX SAS 18 18
  • 5 –CLX’s proposition Confidential Information - Corporate LinX SAS 19 19
  • CLX’s proposition • If technology is pivotal in running Reverse Factoring/SCF initiatives, expertise is also required to build and run successful programmes. • Corporate LinX is proposing 4 key components : 1. Specific expertise to evaluate and build each programme on behalf of its client, 2. Select appropriate financial partners to participate in the programme based on specific client objectives, 3. Provide its own CLeX Portal technology to run the programme between all participants, 4. Assist in rolling out the initiative to key suppliers. Confidential Information - Corporate LinX SAS 20 20
  • CLX’s proposition • Initial assessment of current internal situation with Buyer’s organisation allows to create programme with ROI => Initial Statement of Work • Determine most appropriate solution and the path to attain objectives including technical interface to ERP => Documented functional & technical specifications • Select most appropriate technical solution(s) and business model => SaaS mode ie subscription model or License mode • Choose financial partners based on their offerings by way of a Request for Proposal => Supply Chain Finance, Reverse Factoring • Programme launch with selected supplier communities with pre-agreed onboading objectives => Supplier roll out phase Confidential Information - Corporate LinX SAS 21 21
  • Proposed phases Phases Objectives Delivrables Commitment Evaluation phase & objectives Documented of the most adapted solution including interface with ERP and other technical solutions (procurement, EDI) Functional/technical specifications for participating commercial finance organisations Introduction to selected Commercial Finance organisations with expertise in Supply Chain Technical & functional Finance programmes specification document Initial order for Evaluation of the technical costs + Statement of Work only and solution customisation request for proposal with for phase 1 Commercial Finance (no required commitment Organisations for other phases) Legal validation of the programme and External firm documented TBD 1 contractual architecture recommendation (external firm) Pilote phase with limited number of Joint review of the results participants in order to assess initial results versus set objectives for 2 vs objectives pilot phase Roll out of the programme to a larger supplier group and/or new BU’s Assistance in rolling out the programme to Project team documented Contract for 3 suppliers (optional service) review phase 2 et 3 Confidential Information - Corporate LinX SAS 22 22
  • Initial phase - Pilot • Corporate LinX is proposing to test such financial initiative by way of a 6 month Pilot Phase: – Test the CLeX Portal utilised in a SaaS mode, – Rapid Pilot implementation with 2 weeks work to set up Portal in Buyer’s mode, – Small technical implementation for the Buyer’s organisation, – Limited number of Suppliers with no technical work required for them, – Low costs for the Pilot phase, – On review of the jointly agreed objectives, possible extension to production phase and roll out to a greater number of suppliers Confidential Information - Corporate LinX SAS 23 23
  • 2 options beyond the Pilot Phase Long term commitment can be made out of 2 options: 1. Continue with the SaaS mode for an agreed yearly number of transactions: • Subscription amount based on forecasted transaction volume • 3 year contractual commitment 2. License mode based on forecasted transaction volume: – Purchase of a CLeX Portal license – Implementation within Buyer organisation’s own technical infrastructure – 18% (per annum) based on license value for technical support, corrective maintenance and product evolutions Confidential Information - Corporate LinX SAS 24 24
  • Contacts • Tel : + 33 1 79 30 17 60, • Email: contact@corporatelinx.com, contact@corporatelinx.com • Address: 43 rue Mauriceau, 92600 Asnières sur Seine, France • Web site: www.corporatelinx.com • Join us on www.cfo.news and www.daf.info and other publications Confidential Information - Corporate LinX SAS 25 25