Supply Chain Finance, With An Eye On Size

Supply chains are ever more complex, ever extended and ever disparate in terms of reach and location. For the largest corporations, the network can be, simply put, vast, with thousands of suppliers along various avenues of activity.

In a nod toward reducing complexity and cash flow up and down the supply chain, Tungsten Network said earlier this month that it has partnered with supply chain finance company Orbian to facilitate larger corporate customers’ supply chain finance across the Tungsten network.

In an interview with PYMNTS, Prabhat Vira, president of Tungsten Network Finance, said that the goal of the pact is to extend the services offered to firms using e-invoicing to bring early payment and financing agreements to those larger firms and their suppliers, adding working capital financing tied to invoices. The newest offering comes in the wake of Tungsten Network releasing its Early Payments offering as part of helping firms manage their cash.

Tungsten Network’s Orbian partnership follows the firm’s decision to sell Tungsten Bank at the end of 2016. Tungsten Network had said at the time of that announcement that it would seek a different avenue for bolstering corporate finance offerings.

The executive said that the pact helps form a “one-stop shop” for financing of suppliers’ needs, integrating the Tungsten Network supply chain management with the Orbian supply chain finance solutions. He noted that for some of the larger corporates, across verticals such as autos or more labor/manufacturing intensive niches, supplier count can range from 1,000 to as many as 20,000.

And, said Vira, the clear majority of firms on those supply chains, at an estimated 85 percent to 90 percent, are small to medium sized enterprises.

These smaller firms typically are in need of working capital, or capital for other activities, as they conduct their own activities of sourcing and serving their larger corporate buyers.

The relationship with Orbian, said Vira, is one that offers the duality of efficiency via straight through processing of transactions, and also speed (as applications, acceptance and lending is done digitally), all of which culminates in “a greater efficiency of cash flow.”

Vira also told PYMNTS the solutions offered by the duo do not in fact offer up competition for banks or other traditional lenders.  In fact, he continued, the combined platform offerings can serve as a complement to banks (and non-banks, as per Orbian’s clientele). By coming into this relationship, said Vira, invoice financing and working capital activity from those lenders can move beyond high dollar value but low transaction counts. That means bringing more business to the lenders and better working cash flow management to the buyers (hence boosting liquidity) selling invoices to Orbian, he stated.