Supply Chain Finance (SCF) solutions have a long-track record of improving working capital for corporations. However, many companies still remain challenged with managing the priorities of procurement and supplier management against working capital efficiencies sought by Corporate Treasury.

1. Part I: Why Treasury and Procurement Should Collaborate for a
Successful Supply Chain Finance Program
May 16th, 2017
David Gustin | Co-founder| Trade Financing Matters
Greg Person | Vice President Global Presales | Kyriba

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David Gustin
Co-founder
Trade Financing Matters
dgustin@globalbanking.com
Greg Person
VP, Global Presales
Kyriba Corporation
gperson@kyriba.com
Today’s speakers

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 History of SCF
 State of the market
 Treasury / procurement divide
 Understanding your supply chain
 Strategic execution with SCF
 Role of technology
 Discussion on trends and common challenges
Agenda

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Timeline – Evolution of Supply Chain Finance
1999 Orbian
formed as
Joint Venture
between SAP
and Citibank;
Tradecard
launched SaaS
company
2003
PrimeRevenue
formed
SEC releases
initial comments
on programs
related to rebates
2008
Marketplace to
Auction
Receivables
introduced
Pcard programs
– Virtual
Account, Single
Use
2009
Orbian supports
40 buyers –
Siemens and
GenMills prime
customers
Taulia founded
Kyriba starts
first program
GT Nexus
TradeCard
merger
JPM exits Xign
2005 Orbian
successfully
launched the
first
proprietary US
Capital Markets
funding
program
2000 OB10
founded
2012 SAP
buys Ariba
Accounting issue continues to affect market

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The vast majority of trade credit sits on company balance
sheets in the form of payables and receivables
*Note: $2tn in USA, an estimated 3 trillion Euros of
accounts receivables outstanding in the EU,
estimated $8tn globally
• Trade finance is a large, global and
interconnected industry, encompassing nearly
$8tn in notional credit*
• Most of trade credit (~$7.5tn) is not
intermediated directly and remains on
corporate balance sheets (in the form of trade
receivables)
• Banks are the main third party source of
financing for corporate trade, but intermediate
roughly $500bn of trade credit (12%)

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State of the Supply Chain Finance Market
• It’s still all about Working Capital = term extension
• Broad swatch of industry sectors embrace SCF…Across more geographies
• Regulatory - Bank regulatory costs have become less efficient than third parties
• Funding – Libor costs are increasing
• Big push by Banks to link to Capital Markets – not easy!
• Technology – it’s both platform and managed services
• Replacement market growing
• Huge sovereign wealth risk – South Africa downgrade, Italian banking system
• Multi-Bank solutions on the rise – so many reasons: banking crisis, non banks, etc.
• Onboarding challenges remain – high fixed costs to onboard relationships you don’t bank
• Government push back on supplier term extension – Australia example
• Operations and Accounting challenges still exist

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Polling Question

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Why Conflicts Exist
CFO /
Treasurer
Procurement
Supply
Chain
Balance Sheet
Income Statement
Source & Use Statement

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Trends: Alignment Is Key
Supply Chain
Procurement
CFO/
Treasury
Delivery
Cost
Innovation
Partnerships
On time delivery
Not always about cost
Working Capital
Liquidity
Investments
Compliance
Low cost capital

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Trends: Understanding Your Supply Base Is Critical
Remaining suppliers
Critical suppliers
Diversity suppliers
Bottleneck suppliers
Large suppliers
Top category suppliers
JV partner suppliers
Remaining suppliers
Circle size denotes number of suppliers

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Successful Lessons for Long-Term Programs
• Lesson 1: Supply Chain Finance is a tool…not a strategy
• Lesson 2: Risk Control is always #1
• Lesson 3: Continuous improvement is not an option

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How Treasury can help execute the strategic vision
Free cash flow targets
COGS / EBITDA improvement
Supporting key supplier relationships
Process efficiencies (LEAN, Six Sigma)
What Is My CFO’s Strategic Vision?

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13
Cost of Goods sold
reduction
Assist Suppliers
▪ Is there a no-risk alternative to my low short-
term investment returns?
▪ Can I pay my suppliers at a discount?
▪ Are there geographical considerations to
optimize discounts?
Achieve Better Yield on Idle Cash
or Reduce COGS
Working Capital & Operating
Cash Flow Improvements
▪ Extending payment terms to some or all
suppliers?
▪ Maintaining existing payment terms if
receiving downward pressure on terms
from suppliers?
▪ Move suppliers off discount terms to net
terms?
▪ Improve supplier relationships?
▪ Assist suppliers in getting access to capital?
▪ Reduce supplier risk regarding cash flow
challenges?
▪ Is there better AP process to drive more
transparency & efficiency?
Supply Chain Finance to Drive Strategic Results

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Strategic Execution
Suppliers
Procurement
/ AP
Treasury/
FP&A
Stakeholder Business Driver
Supplier Where’s my money?
AP Are we executing PO/Invoice/AP per
contractual agreement?
Treasury Do we have enough liquidity?
FP&A Are we meeting FCF and working
capital targets?
CFO Are we meeting investor
expectations?

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So How Does Technology Help?

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Fintech Fostering Alignment - What Gets Measured Gets Managed
FinTech
Visibility
Supplier
Invoice &
Pay Status
DSO
AP
Invoice &
Payment
DPO
Treasury
Cash Flow,
Interest Inc
& Exp
CFO / FP&A
Working
Capital KPIs
& FCF
FinTech
Execution
Supplier
“Pay me
now”
AP
SCF Smart
Payments
(funded v
non)
Treasury
SCF Bank
Programs &
Onboarding
CFO / FP&A
Improve
FCF, DPO
Measurement SCF Management

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How SCF can support initiatives
• Cash flow / working capital, reduction in cost of
goods sold, etc.
• Identify opportunities on an individual supplier
basis
Utilize individual supplier characteristics, credit scoring
and payment terms benchmarking
• Determine impact on supplier and buyer
• Iterative process – buyer tacit knowledge of
suppliers
• Cross functional win – led by you!
Where to Start?

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$0
$200
$400
$600
$800
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC+
Millions
Spend
AVG of 65% of spend with non-investment grade suppliers
Financial cost and risk which could be mitigated with SCF liquidity
Supplier Demographic Analysis(Example)

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 SCF solution to soften impact of term extension
– Value messaging and execution critical to program success
Getting It Right the First Time
Segmentation
(VSA) and
prioritization
of suppliers.
Program
design
Assist Corporate in
creating suppliers
messaging /
communication about
benefits of the program
1 Selection 2 3 4
Activate
suppliers‘
requests to
join the
program.
Perform KYC
and signature
of contract
Invitation & Education Activation Monitoring
Follow
program KPIs
and adjust
approach as
needed

20. Open Discussion

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• The Critical Importance of Business Continuity Planning for
Treasury
June 13th, 2017 | 2:00 pm ET | 11:00 am PT
Approved for up to 1.2 CTP and up to 1.2 FP&A recertification credits by AFP
• Simplifying Payments - Top 5 Reasons Why the Cloud Improves
Your Payment Policy
June 22nd, 2017 | 2:00 pm ET | 11:00 am PT
Approved for up to 1.2 CTP recertification credits by AFP
Join one of our next Modern Treasurer webinar sessions:

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Additional Resources
eBook: Making the business case for supply chain finance
Get PDF at: http://kyri.ba/SCFeBook
Global Business Intelligence report: State of Supply Chain
Finance Industry, Entering a New Era of Maturity
Get PDF at: http://kyri.ba/SCFstate

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Thank You for Attending
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