B2B Payments

Why Supply Chain Financing Gives Firms A Major Boost

Working capital specialist firm REL recently released the results of its 16th annual European Working Capital Survey, and according to the findings, more businesses are integrating supply chain financing (SCF) into their operations. The result is creating a “positive effect on the overall health of supply chains,” according to REL director Jonas Schoefer.

However, the REL survey showed that if all companies were to optimize their working capital operations – in respect to payables, receivables and inventories – the money that could be released would be nearly €900 billion.

According to the survey, the best companies have a well-optimized process, and in effect are able to pay suppliers two-and-a-half weeks later while also operating with nearly 70 percent less inventory. However, sustaining working capital improvements is still a huge challenge for these firms, the research said.

“Only 14 percent of companies in the REL study improved days working capital (the days it will take a company to convert its working capital into revenue) for three consecutive years,” the report said, according to Supply Management.

Schoefer added that companies are paying suppliers later because more firms are using SCF.

“This would extend payables on the balance sheet, but actually mean that suppliers can access payments earlier. This would also explain why we can see a like-for-like trend in receivables – companies receive payments earlier on the whole.”

 

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PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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