A proposal to stimulate growth and improve economic vitality of diverse small businesses in Greater Philadelphia by unlocking liquidity in the City of Philadelphia's vendor payments system by eliminating cash gaps across the supply chain and providing affordable financing options.

1. The City of Philadelphia Diverse
Access to Capital Initiative
Proof of ConceptJuly 2016
This information is not for public use and not for distribution

2. 2
EXECUTIVE SUMMARY
Working capital management has traditionally been a zero-sum game as Buyers and Suppliers
typically have competing objectives - Buyers typically want to extend Days Payable Outstanding
(DPO) while Suppliers need to reduce Days Sales Outstanding (DSO).
In order to stimulate job growth for diverse small businesses in Greater Philadelphia, it is imperative
to unlock liquidity for these companies by eliminating cash gaps across the supply chain with
affordable financing options.
Our mission is to unlock the potential of diverse businesses and increase their economic vitality by
creating a Supply Chain Finance (SCF) program to:
 Provide greater access to affordable capital by discounting/financing their high quality
receivables with the City of Philadelphia
 Provide technical assistance in the form of strategic advice, developing business plans,
budgeting, financial modeling and effective management
 Establish an ecosystem of diverse small and midsized businesses who share best
practices, collaborate to create new opportunities and grow revenues, improve operating
efficiencies and enhance their credit worthiness
We will be socially responsible and help the city’s pre-K needs of its children by donating a portion of
the revenue generated by this SCF program to help the City fund pre-K education and other public
school programs in the Greater Philadelphia area.

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PROBLEM
Traditional Small Business lending has decreased dramatically since the U.S. Banking crisis in 2008.
The cost of regulation and operational complexity has reduced the profitability of lending to small
businesses for banks.
The number of small business loans peaked at $14 billion in 2007 and declined to $5 billion in 2010 -
and has continued to decline.
A recent survey conducted by Pepperdine University revealed that 67% of Small Businesses
applying for credit were unsuccessful since the financial crisis. While the TARP program sanctioned
more than $30 billion for Banks to provide small business loans, approximately $4 billion went to
these companies and virtually nothing was provided to diverse businesses.
Lack of access to traditional financing has forced our nation’s primary economic engine – small
businesses – to seek credit from high cost and in many cases predatory alternative financing
sources such as hard money lenders, factoring companies and merchant cash advance providers.
On an annualized basis, the cost of capital from
these sources can easily exceed 100%

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LIQUIDITY DRAIN
A Cash Gap is created when the City’s payment terms do not fulfill the operating cash
needs of diverse small businesses that lack access to traditional working capital
financing. This Cash Gap in turn, drains the liquidity of the business.
Consequences of Liquidity drain
1. Operating invoice to invoice
2. Predatory lending
3. No growth or job creation
4. Business failure
CASH GAPS CREATE
LIQUIDITY
DRAINS

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EXAMPLE OF ACTUAL CITY SUPPLIER

6. Retailer or Service
Provider
Manufacturingor
Assembly
Operations
Wholesaler
And/or
Distribution Consumer
Raw
Material
Provider
SUPPLY CHAIN CASH GAPS = Monetization Opportunity
Supply Chain
Slow payments create cash
gaps
4Copyright © 2016 Project
Orange
FinTech has yet to disrupt Trade Finance
with very little focus on supply-chain
financing for the small guys.
Cash Gap Cash Gap Cash Gap

7. 7
SUPPLY CHAIN FINANCING
Supply Chain Finance is a solution that provides Buyers with enhanced electronic payment capabilities and
facilitates working capital management strategies while offering Suppliers cost-effective collection methods,
attractive financing opportunities and efficient cash flow management.
SCF is a solution that changes the working capital paradigm by combining elements of technology, finance and
services to provide buyers with enhanced payment capabilities via electronic payment methods while facilitating
working capital management strategies for Suppliers.
SCF turns the zero-sum game into a "win-win" by allowing buyers to extend contract terms (e.g. 90 days vs. 30
days) while mitigating the impact on the supplier base by providing an avenue for suppliers to obtain early payment
on their accounts receivable (reducing their DSO and shortening the cash conversion cycle).
The financing source (typically a bank), uses its balance sheet to provide financing/liquidity to suppliers for the
period between the discount date and the invoice maturity date. Financing is offered to the supplier based on the
buyer's credit quality - which significantly lowers the cost of capital to Suppliers.
In some cases Suppliers might be able to obtain financing at a cost that is 25% of what they currently pay!
Buyers get the benefit of reduced processing costs while mitigating the risk of supply chain disruption. This solution
is ideal for credit-worthy buyers who are seeking to benefit the supply base by leveraging their financial strength to
encourage the delivery of lower cost working capital to their vendor-partners.
://2016/02/22/report-minority-owned-suppliers-lack-access-to-capital-education-
around-financing-options/

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PROOF-OF-CONCEPT PROPOSAL
The Diverse Working Capital Facility is a Proof-of-Concept Proposal that targets
diverse businesses doing business with the City of Philadelphia.
The Program will:
• Prove the concept of a Buyer/Supplier side Diverse SCF Program
• Target diverse businesses doing business with the City
• Build a communication plan of the benefits/features of program through
partnered webinars, Chamber and other inclusive communication events
• Stimulate job creation in diverse communities
• Partner with The African American, Hispanic Chamber of Commerce, other
diverse business and inclusive organizational initiatives

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PROOF-OF-CONCEPT PROPOSAL
Diverse vendors doing business with the City of Philadelphia as well as non-profits providing
services on behalf of the City (e.g. Pre K, Department of Behavioral Health and the Phila.
School District) face liquidity gaps due to the City’s lengthy payment terms.
The City, however, has credit ratings of A2/A+ from Moodys/S&P and can help diverse
suppliers obtain very attractive discounting/financing rates to help close liquidity gaps by
participating in a Buyer or Supplier-Centric Supply Chain Financing Program.
Vendor City
Vendor provides
services to the City
The City acknowledges its
obligation to pay the vendor
in 90 days
SCF Early Payment
Invoice
Discount
1 Day TBD
1 Week TBD
2 Weeks TBD
3 Weeks TBD
Vendor now has a payment owed by an A2/A+
rated Obligor, due in 90 days…
…which can be liquidated much sooner, at a
discount or financed based on credit rating of City

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SUPPLY CHAIN FINANCE PLATFORM
City
Buyer Suppliers
A B C
SCF Platform
SCF Bank/Financing Provider
1
2
4
3
56
1. Buyer sends/uploads approved invoices to the SCF Platform
2. SCF provides an option to discount Supplier’s receivables to the City of Philadelphia
3. Supplier accepts discount proposal via SCF platform
4. SCF platform releases payment request
5. SCF financing provider makes payment to supplier net of discount or provides traditional Receivables
financing
6. SCF financing provider collects from buyer full invoice amount at invoice maturity date or provides
financing to buyer

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PILOT PROGRAM NEXT STEPS
• Collect
supplier data
for initial
analysis
• Define
enrollment
strategy and
timeframes
• Define
project team
• Update
supplier data
• Segment
supplier data
• Carry-out
data analysis
• Prepare and
review
analysis
result with
City
• Review
communication
material
• Sign-off
communication
material
• Develop
communication
material, letters,
brochures, emails,
etc.
• Upload supplier
data into
system
• Send
communication
s to suppliers
via email
• Contact
suppliers via
telephone or
on-site visit
• Recruit &
onboard
suppliers
• Refine
marketing
strategy if
necessary
• Refine target
supplier list
• Track and
report
supplier
enrollment
status and
issues
• Conduct
marketing
sessions for
suppliers
• Approve go-
live
notification
• Activate
suppliers
• Deliver
invoices
• Ensure
readiness of
all parties to
go-live
• Notify
suppliers of
live date
Enrollment
Strategy
Data
Analysis
Communications
Strategy
Enrollment
Ongoing
supplier
marketing
Supplier
Activation
Program Planning Program Execution
SupplierEnrolment
SupplierActivation
SCFPlatform&City

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Contacts
Wayne Trotman
Trotman Capital Advisors
e:wrtrotman@trotmancapital.com
t: (609) 213-0840