Supply Chain Disruptions Underscore Value of Alliances, Need to Strengthen Payments Relationships

If nothing else, supply chain disruptions over the past three years have driven home the importance of improving collaboration with both customers and suppliers — including mutual support around payments — for companies in the B2B space. 

As the economy has grown increasingly globalized, they have realized how heavily they rely on their partners to survive and thrive, Jean-Michel Bérard, CEO at Esker, told PYMNTS.

This has led some companies to adopt new supply chain risk management practices, such as diversifying in order to reduce reliance on China. Along the way, they’ve shifted their focus to innovation and restructured in order to build resilience and flexibility. 

“Before the pandemic, cost reduction and productivity improvement were the main drivers for investment,” Bérard said. “Those drivers are not going away, but have proved to be not as essential as meeting customers’ expectations (i.e., business continuity).” 

A third lesson of the supply chain disruptions has been that mutual support is critical during times of uncertainty and instability. Companies have found that they must build and maintain strong supplier relationships and alliances to reduce vulnerability. 

“For suppliers, that meant doing things like extending payment terms, whereas for customers, it meant paying on time or even earlier,” Bérard said. 

Adapting to Changing Conditions 

Esker, which makes artificial intelligence (AI)-driven process automation software for finance and customer service, helps firms accomplish this with solutions that provide full transparency over the order-to-cash (O2C) and procure-to-pay (P2P) processes. 

This equips companies with the type of real-time visibility that’s essential for making strategic business decisions and adapting to changing conditions. 

“Esker’s AI-driven technology automates O2C and P2P processes,” Bérard said, “removing low-value tasks and speeding up processes so that companies are in a position to pay and get paid in a timely fashion.” 

Optimizing Cash Flow 

On April 20, Esker announced it had made a strategic investment in its partner LSQ, a maker of working capital finance and payments solutions. 

See also: Esker Invests $5M in Partner LSQ to Expand Supply Chain Finance Services

Following Esker’s equity investment in LSQ, the companies will deliver a unified platform to help customers optimize their working capital. Customers will be able to leverage the Esker/LSQ bundle to help suppliers in need of cash secure the business, preventing supply chain disruptions, Bérard said. 

“We believe that supply chain finance is a key element to optimizing cash flow, allowing businesses to extend their payment terms while providing options to suppliers (especially smaller ones) to get paid earlier,” Bérard said. 

Building and Maintaining Excellent Relationships 

Companies that seek out these solutions are looking for alternative financing solutions to banks and are looking at using business flows (e.g., spending and serving customers) as a tool to finance working capital and complement the current banking system with a flexible financing option, Bérard said. 

The solution “enables customers to get access to a panel of ways to reduce their [days sales outstanding],” Bérard said, “which is a major concern given the current skyrocketing inflation and rate increases.” 

Related: Esker’s New B2B Payments Platform Aims to Improve Cash Flow Mgmt