Supply Chain Finance and Payables Discount Management (SCF/DM) initiatives need a framework to ensure that programs are approached on a strategic basis that bridges both the Supply Chain and Finance organizations. PayStream’s analysts are working on such a framework to help enterprises implement an “integrated” Supply Chain Program, and have created the Eight Building Blocks of SCF/DM framework to get our clients started. Just as a map helps you understand the context of your journey (the roads you need to navigate and alternative routes), so the SCF/DM framework helps enterprises make decisions about the best route and objectives for their situation.

To build on this theme, PayStream will host an educational conference “Supply Chain Finance - Discount Management Summit” in June 2008 to bring together supply chain and finance executives to explore the future opportunities in working capital. The theme of this year’s SCF conference is Uncovering Working Capital…

Every Supply Chain executive can tell you that sourcing strategy, category depth of expertise, negotiation prowess, and procurement execution are the critical components of a highly effective supply management initiative. If everyone knows the basics, why do we still see such an amazing opportunity in eProcurement? It’s all about visibility (or lack thereof) of procurment processes.

Lack of access to spend metrics and controlled processes has been a big block for many Source to Settlle process improvement efforts. The opportunity for the supply chain organization is enormous — combined with payables automation, it’s very enticing. Moreover, spend data is also vital for other business strategies, such as budgeting and planning, inventory control, and product development.

Data visibility is critical for identifying hard-dollar savings opportunities and developing sourcing, budgeting, planning, and product strategies. Most importantly, it is critical because with it, overall Spend Visibility will provide an important foundation for advanced strategic working…

The most common question we get from client organizations is “What technology makes the most sense for automating our operation?” But we think there is a better, more important question that is frequently left out. How should I justify the automation of our operation?

Going paperless requires corporate buy-in. And in order to get that buy-in, you’re going to have to develop a bulletproof business case. The first step is to accurately profile how you are doing with your existing process. Some call it current state analysis, others call it benchmarking.
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Dynamic Payables Discounting is a process which allows buyers and sellers of commercial goods and services to dynamically change the payment terms — such as net 30 — to accelerated payment based on a sliding discount scale. Dynamic Payables Discounting is “Dynamic” in one or more ways.

Dynamic Payables Discounting:

1. Allows supplier to control payment timing
2. Discount amount is calculated dynamically based on the number of days remaining until the due date.
3. Discounts do not need to be negotiated in advance, rather can be taken dynamically as working capital needs dictate.
4. Trading parties can tap into an alternative source of working capital with the use of third party creditors whom pay early on behalf of the buyer.

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