often
and look into this hehe web a NAR on supply chain finance
on national Donovan sexy press Enter
technical director here the ACT four-week echoing
a a few technical points now weapon of setup the
a menu bar across the bottom that allows you to open various Windows
you can move the surrounding and resize the moment in my spam the green button
down there
and the question mark on it and that's for help because any technical
difficulties
and there's another problem there which opens a Q&A wind
and that's just send in questions for us to take at the end
should explain this webinar will run for
Force five minutes and will have two presentations
so Chi welcome are two speakers first of
have trauma share have trained
sales in the transaction banking at Lloyds Banking Group Moretz
sponsoring this webinar anti several other
AC key events over the rest of the year so
run thank you very much
for that
today John will be
setting the scene and explaining about what constitutes
supply chain finance half in your organization
we don't have a presentation from Tanya Jefferies
is responsible for attacks Inc aftermarket at
the the Mopar network provider the
is a user SAS supply chain finance
and with a program from its sedan you can tell us about that
actual experiences well then finish with discussion and questions
you can send in your questions through that Q&A when do I just mentioned
there's no need to wait until the end to send em
to send them as they occur to you if we do manage to take your question at the
end
will not be broadcast in your name company details
then time they can I just add
according to this weapon I will be available on the ATT website
in a couple of days time copier science
so meeting on
supply chain finance
is one of those financing ideas that really doesn't seem to work some magic
them in the all the process plant
seem to have to get a benefit it's a real win-win situation
however it just
suffer a little from confusion over terminology so to explain all
hand over to John from points good afternoon
john was a if lloyd I am what I'd like to do
initially is just give you a quick run-through what up in a cover
and and they will move on to the detail so
keep keep starting flyering to me is what we mean by
swatching financing is it actually new or have we been doing this for a hundred
years
I think the answer is we've been financing supply chains for an awfully
long time
historically we will find it see slight change
using traditional documentary trade products
what we now do increasingly is operating the ok to caspase using
digital data static document retraite products
but the under fundamental this at the site the characteristics still
largest size so swatching finances event-driven
in this case the offense are into physical supply chain
we are providing fine its fascinates just
is often a degree risk mitigation involved
in me in the solutions we provide and then at the end
settling I additional factors in the digital space include visibility control
efficiency gains
and also the important subjects balance sheet or accounting treatments
as we move onto in a second on to the next flight one
things I will mention it difference between credit risk for mistress which
makes material
impact on the way swatching finance works
will look at the benefits to the supplier and benefits to the fire
I will look at a at and real-life typical traits cycle
sexy quite a complex traits cycle but I've done that deliberately
I'm in order to illustrate that a client
typically sits in the middle a trait a swatch and therefore has to
track cycles going on 17 sourcing cycle and they have a
selling cycle and the two things typically overlap
so what i'm showing you there on the screen now is
a today it's a typical try cycle and a traditional try to find a solution
will be applied to to deal with the various stage in the cycle so you can
see there is actually what some people face with a closed loop
model or a self liquidating model in this case a client
is tending to the business office on the something so I first met with securing
orders for their goods
when the sailors creed the car purchase order than
ordering the raw materials or components whatever it is they have to
source on the sourcing side in order to make those goods as you can see is the
line progresses
there the goods that the goods are shipped invoice
goods arrive table is an approved on the selling side
the I see good sleep factory CAS completed and products
important that the and buyer's invoice receive was created and eventually they
get paid
so I don't dwell on that side could us dealing with the old world
documentary trade but that's just illustrate the point that's how we would
find a supply chain
in the past sending to the new world
you have a slightly simpler picture but it's exactly the same traits cycle
working there from left to right I'm
various types of supply chain finance our illustrated
what we gonna focus on is supply of Finance which is the most popular the
typical
solution that we tend to see today but there are other talks
watching funny switches with a quick mention of so purchase order finance
is really about financing the pre-shipment period so if you're
sourcing and you needs to be in caring and you can call suppression
cost presenting the purchase order getting finance against
that would be regarded as a supply chain finance solution
which is in the purchase order space invent refinance
again is when the good self physically in your warehouse okay 30 production
cycle
and then receivables finances where seller
you have raced an invoice should goods and your accelerator
so that's the best story if the at the different types
supply chain finance leaving this with the one that's the real focus today
which is
Supplier finance the characteristics supply-side its
other lead party espy financial issues actually the buyer
so the pie is initiating the program
and its typically a relationship one by it too many supplies
we do our situations where it's what you want wants to more typically is one too
many
and the defining characteristic which which makes 500 different
for the other people's finance is the
is triggered by the approval of the payable rock
by the ship into the good so the racing and that's a very significant difference
this once a plate was approved we have eliminated performances
service your call what I said earlier this is cheap credit risk for mistress
at at the stages prior to the approval of the payable
there is a performance risk that people may not be proved difficult may not be
correct i mean
shift on Sunday may not even exist a in some cases
once the privilege that was a fail is proved we've eliminated
fortress a.m. mechanism actually raising the finances to purchase the receivables
from
suppliers so in that sense it is a receipt as far as program but it's
against the background of an approved
payable and the supplier and indeed
by access is all this information through platform social electronics or
digital
able to strike to process and therefore pretty cost-efficient
said that's what we mean by spot finest some people refer to this is proof
tables financed
it is exactly the same thing various names salt thanks to
so that's why I ain't so what are the benefits for
supply fine its benefits for the buyer
we have we need to be careful how we position especially when we say
increased a spare less spending it doesn't necessarily mean extending
days payable outstanding something which is not like commercial
it means taking the days payable outstanding out to the industry standard
and trying to standardize as far as you can not always possible
standardized across all spies the final out you can manage your
fables standardized industry standard basis any
more efficient for you as a buyer
and reduce cost you could sold office Cirque
really is possible so special site key point there is
there is a the benefits to the supplier actually end up being benefits to the
buyer
if the supplier can raise finance more cost-effectively
all raise additional finance so that that their production cycle is more
efficient
then that means cost at the goods a best-selling to you as the buyer
will be reduced and I can be reflected in the price that you pay
stabilizing supply chain and the supply is within the supply chain
I think many years ago it would have been the practice
to to source from the cheapest supplier and switch suppliers
at very short notice in order to get the best deal the station last 10-15 years
has become
reading not be acceptable way behaving and typically
most by nice big guys watching and trying to show that the supplies are
able to operate consistency consistently and supplied
consistently I would not have a situation where have and shelves if the
retailer
for the production line stops pic because one single-component
has not been supplied because supplies run out of money
so supporting the supply chain to keep alive benefit
social responsibility thing is facing treating a spice fairly
and this is a good way ensuring trees spice fairly
finally on the buy side balance sheet neutral again
sensitive subject is because you need to be careful not to overstate the reality
the program the way the programs are designed they should
results and no balance sheet impacted by in other words
trade creditor treatment remains unchanged
each buyer has to validate that with that own order
and this process that is really case by case
on the supply side the benefits are actually reduced
day sales outstanding says it ironically you
if both parties achieve the objective day a
which is what worries so it's a win-win the receivable on the supply side
actually stood cash so it does reduce
the day sales outstanding reduce finance cost
by and large the buyer will be a stronger credit ratings and the
seller not always but by and large in and in most cases if I will be
investment grade
act a client as well therefore to benefit the reduced funding costs
associated with that credit grade
will be reflected in the prices paid by the spot for receivable
so that the cost reduction access to finance which
decouple from power she strength what that means is
Supplier maybe Smer mid-market at
company typically the amount they can borrow
is lost an upside to that balance sheet 11 security that they can sledge
supply finance solution is completely decoupled from that is based purely on
the level
approved payables that they can present for us to purchase
hair I'm I think the only other efficiency gain I think
spices that they give visibility into what's been approved and i got
absolutely 100 percent certainty about
the amount they gonna get paid and the timing of the payments
so its efficiency gain access to credit control
and finally because this is based on approved tables with no performance risk
at all
these are non-recourse financing which means
they've the risk has been limited eliminated such as it is
giveaway investment grade nature the advise the risk has been
I think those are the main benefits for both parties
and just it's a wrap up for a handover to to Daniel
on the success criteria what woody what what are the drivers behind a successful
supply finance program
I think two stages their program initiation in that program
optimization on the initiation side
collaboration within the company within the fire company
is key between Treasury finance procurement all the stakeholders are
involved
in the procurement process in the paper processes finest processes
absolutely k ever has to be on the same same way
dedicated supplier on-boarding sites a
is also important splatter boarding is one of the more difficult
aspects of the spot finance program so having a dedicated focus and
longboarding site to make it as easy as possible ski
consistent messaging is also key I'm if the buyer
the client is determine if this is a good solutions for them and a good
solution for their
suppliers they need to tell the suppliers pretty consistently at
supply conferences in the general Communications that this is how the
program works
and we really would like it to use it prioritization a key clients very poor
if you have two thousand clients
it's gonna be a slow process of boarding them if you prioritize
top 100 the top 200 the make up the bulk
have the sourcing and these are the splicing have long-term
long-standing good relationships with they're likely to come on board very
quickly and it will be successful program
you have to bear in mind once approved payable you're off the hook so
dealing with splicing never dealt with before on this basis is not necessarily
a good idea
finally on with all the initiation site project managing it
from into it and showing the treat this as a project a question and it just goes
for the bank as well
all these to all these requirements apply equally to the financier as well
as City
the fire what's the program is running but
good idea to monitor benefits make sure yet you realizing the benefits
you you expect to get in terms of working capital benefits
and also any cost savings see you expect to get through improved pricing
I efficiency gains standardized time jobs again
let's make sure we leverage does and take advantage of those opportunities
spy finance program should then be embedded as poss the PA you procurement
process already in use plus coming aboard
if they are in it stew fish in the last part juice plus
then they should be adopted on to the program
almost automatically as part of PA you process you continue to leverage
benefits and and finally where you are looking to
extend credit period to a to an industry standard
you need to make sure you actually do that with all the new supplies coming
aboard as well as the existing supplies
so I think those are the success criteria I will
I would out focus on in order to make the best
to drop the best benefits from from the program
I think about that social
than your character take us to your experiences
just thank you John also them understand Jeff
a I look up there's capital markets
E I just on spirits all
watching
and so stop it what I
just like to outline how the have finished
started I'll
so a to initiation the
Spotify strike a budget but both Treasury
and Kimmage this clause recognition
ok my question and 5.6 percent
is
we work together in broad to Mitchell
whitespace to swatched represents
actually object to such
after you went through the process full no
not been possible
achieved type supplies
without help account just
came into like down the project once it stopped
got a.m.
to make you understand offering special sometime
were awk student
we when on
Kathleen last I'm
presentation wineries
service as well what it is
what such toward
so when we said about doing
of key that
to actually support supply chain sounded
standardized payment
which a which was a an ongoing process
I one or the other key initiatives will too sold
no sergeant Justin practices
you need to make sure that casting
sure that his own structured interrupted
point state no see on benefits
checked was trunk what free
so choosing iPod the bank having established
want to go down supply chain finance
offering we you apply at all
standard internal processes select
fighters we adopt policies
discussing an approach situation thanks for
give them an option sent
I'm how to do it we actually went sorry
a for more are peace process
and in the RT are be processed quite comprehensive
we actually flights going try
along a number of different
areas say for example I'm in front a shit
it's important for us to establish the teens were
fast banks what experience for this catwalk catwalks
manage information is important for us to understand walk
deliver two of simpson's understanding shouted mentation
going wanna take a right it's going to be
to which sponsored discussion
thanks I also
18 yea ritual to understand what business continuity
a that is she's recognition is
not owned what happened thanks
platforms sales that also understand
lifetime against I happened thanks as well
with this have materially fun
and also wants to understand what financing capsule
constraints requirements
she's could be the outsiders games never
tell how successful not ski today
but needs to understand is it was right successful
the bank's service all
supply it
what she's gone through the phone lock the process
three banks top three banks online
schools and we actually
face very interested Swan
of it by joint
boys JPMorgan Street
so
stage the south and how yes implement
well wanna pick one up key taxes what that of it 17 documents sign
so simple ito
stand it thank you want to negotiations to set
negotiations shift and
the other attraction
was we needed
structures practices both faxed
program and obviously
give us past skunks surprise
and coverage as well 1/2 inches
that the offering is fine single
access point comment thanks one
she said software supplies were to access point
discount scented and
in summary the benefits whether at to banks balance
you saw going to
price strong UK anti-smoking backstop
quite I don't miss lee
one just battle
I splice she did not respond
not different change
so well renowned beaches so a week we initiated our program in September 20
a we today are thanks
night experts a
to Kevin at work closely with all by are
shit specter's fiction and
out maximize thank ok
on board actually cheated
that you keep this 3 week steering group
we could call it managed call or very important
make the teachers patient but
sorry for import tax that I'm Jack
and get a product works
spot another area that was very helpful
on sorry workshops thanks
this a sign for that helps
a cycles any
touch and stand what it is make me better
one Alex and iPad
set what subject
have said right
thank you can hear any sounds as if you're your system is up and running and
delivering what you want to do it to before we
move on to the general questions and discussion I'm
when you're about to take the opportunity to to a poll
offer people attending the weapon just to give us a flavor
how far down the road you are considering and scratching finance
what if you could respond to this question should be taking the
appropriate box so the question is how far is your company come
on the SAS journey one
with not considered it to we've considered it
but decided against it 3
we continue to assess scratch and finance but not yet convinced
for the currently implementing the program
5 actually have a program up and running you
protect the appropriate box basically
their national order progressed through the process
for
responses come in and weaken have a quick look things stand
great so there we have the responses so this
28 percent not yet considered it so a chance to
after this session and but
21st 13 just over half
you are actually embarking on haven't
supply chain finance program especially at this audiences
somewhat selecting but that actually question courage in
suree
move on to the next question and what would you say
as the key drivers setting up supply chain on its program
your supply and based on your understanding and it looks
a fair number you have been looking at it and could you just walk to talk to
attributes that that you think would be key benefits
so we've got extending payment terms:
standardization I'm terms added security of supply
through supporting the financial by Peter Schiff your supply chain
or just general efficient procurement in working capital practices
I I'm seeing supply relationships I
so i think im 6 and good corporate social responsibility practice
all some other attributes some others
look at the overlapping but it is contest choose which ones chimes best
with what you think
the key benefits
so little bit spread throughout the
different attributes top there is justice the general efficient
procurement
working capital and sending payment terms:
and comes in second place love to hear the percentages add up to more than 100
percent
that's what and and
any comments from minor correct round the table hair or Sep
broadly in line with what you might expect this
this story what I would expect I think
I think maybe the benefit is supporting the punch by purchase watching maybe
States you
suppose supply those service port having a
to mention it think maybe real-life such a pig a
thing say that because certainly and
my experience from talking to people about this subject is that ends up being
the actual crucial to as and
if your suppliers are struggling and this was particularly true
and we went through this financial crisis that became
real driver X shelves or
stopped production like test serious yes factory with us I'm
think we've just got time we have one for the poll question which
and percussion out and then we'll get on to the general discussion so
and setting up to the program
certainly has some benefits but washing issues can you say
might need to be overcome all my coaches back and
and he just not any that you think around
so many rescue boxes you the appropriate
so ok to have you back is too complicated
all suppliers wouldn't really want it 3
insufficient benefit for us or
lack of clarity as to intermission take responsibility
I unfavorable accounting or some other
negative attributes
now we have at the offices there fairly
he even really and space
that the truth is or all those particular attributes
could be discouraging or hold you back
and some other the
if you think about it shouldn't really be problem
a in lacked clarity as to who in turn they should take responsibility
and should be table overcoming
I yacht in
in my spent yeah doubt first
me which was that include
situations to keep ok
gauge alteration kid
banks one Capcom time it's those guys
route support finished ever the response to this crisis
if it is supplies of boxes think the opportunity to
financing receivable of course
but she way without fight without trying your credit facilities
is generally quite a popular think spice
and in our program feedback
reducing get feedback from swype such program very
use and they really do see that I suppose to some extent that might
I'm depend on what supplies you have because that
leading to one of the questions that we've had which is re talking about
K that we want to question is generally now
and essential
the fire has a better credit standings for on what happens
if your supplier is very much same credit standing
walloping first I think
is not essential placed typical by and large by
is the dominant this program Anissa by Isaac
better credit rating that drives the benefits pactel
through supply chain supplies it is conceivable
for tops some reason program secret place
is not specifically to leverage the credit check fire
a bit maybe something else and it baby
operates a checking on a one-on-one basis where
what slide quite possible the roles
sorter Supplier what's be part of this program for two
baby gift or mitigation a
about chichi rather access to cheap financed
but most I would say if I will be too strong
Credit Party yeah relationship yeah
yes interesting points I think that wanna
things to it also considered is whether supplying cases watching
fun it gives me option cash if they so choose
and unit
options based on buyers credit setup
thanks it does about
change manage that which taking toward
it it's a binary decision other
of about work capsule fact cast not
quite I think the other make
as I said there's very strike this week marks way supply two engines
surfer for the bay watch for largest supplier
with a less strong buy it might actually be about you
principles salespeople policy okay
thanks for that one I'm there are actually several questions China merged
together
around the sure on-boarding process
I'm a very 341 for John
and which is what is an onboarding sites that you mentioned
during your presentation but in addition just in general
how does that on-boarding work is it the to buyer who does that
or just the lending institution help in that process
it's a combination of the two embody site is
is a sites where the supplies can be
registered and the the arrangements stylish
whereby taking expressed a desire
sell their receivables source and programs that weekend
go ahead and do that certain amount to documentation is required
legal agreements that are required with the supplier
a and which I make that as easy as possible
I think in terms of who drives thats it is the thanks
so the process that just that but she won't work unless the buyer
very very much promoting the on-boarding
supplies if we were the only party China it's possible never get any spot
by is absent pivotal to get spiced Jan
yet on the right side across eating Mike
festival discussed some line around educate
says speech
solved supply suspected
generally how work
so yeah I echoed comment
we were involved one suspect
Treasury also wide
the Katy yet there are some explaining it
and presentation to to your suppliers
on what it's all about got a Pacific question here is
where any of your surprise resistant to joining the program
and did you then try to overcome it or as you said
in a way is for them to decide how accident
with its options
about we or
sorry no
okay
again talking about credit to and special provisions
find
just finance provided count against the
and then the dentist limits for the fire using up suppliers
get asking
yeah the short answer is yes it does a
because that a that is the source became
so a having said that we dealing
could only hit with investment-grade bias and make sure the program
actually makes it very very easy to to share that with another back
me too JP Morgan in this case so
ever if a program is getting pretty big and
that was star impacting yet the
detect nasty and before it becomes a problem
which starts or to the buyer about which %uh the bank
with a like this to in it bring on board and same program
and a it's like to process to be fully disclose
but it means we can that we can ratchet up the appetite by simply bring
office acid
and in the selection process keep
Scott
whether 3
also spigot
have yeah
okay a.m. or frankly
accounts I think this is accounting please explain how
shes his balance sheet neutral
assume that's a asking about what is account
treatment offense as part of this
and dunno practically couple actual what
them she you try thinking about watching you sure it doesn't change the
accounting treatment
payables payables remain trade credit
fis balance sheet and programs are
the zoning with that in mind and have been designed
in consultation with the Celtic fest with your decision
so the the principal that should be the answer
however answers then 75 people were sort of the fire
us whether that is actually a case on Oct right
another that that's committed to us and at the ACC we did a a report on
question some years ago and
worries around account whether
sums some circumstances that tried
ample somehow P the cash crisis said fact that and and that's what we
structure that the program for you separatist outfit individual order to
final and what are the main issues there is
we approached receivable spot yeah that if the transaction
30 yep these programs are in existence and up and running and working to
that personal insuperable problem
just another very quick for me is
wages this stand intensive
impact on the credit rating all the fire company
so were using up some sort
Dept safe but in terms of the
penetration of of the Fire Company
don't leave have any impact these obligations the I has anyway
nothing has really changed so I'm specs
absolutely a the the piece of paper
of Save the Date object at work type
in a in a similar sort of thing to cash a same question from the other end
from the fire sorry seller
fires and and they've now use their receivables
finance how does that
impact on their standing access to a credit
I think a it's a positive impact on the spire
p the
challenge to avoid possible to avoid it if they lend
supply is relying on those receivables spot security package
support let's say an overdraft and those receivables
will no longer be available having said that the cash will be available in
stature that me for no
draft will go down
that they that they sell that spending reduces so so then the
funding just good at so the the from
lender to a supplies perspective to avoid you avoidable
financing us the issue but actually it's beneficial to us
thank you and
is another question here or level
all KY see know your customer or anti money laundering
on the mister on supplier
there is a level KY see all supplies that
I'm not undertaken by the about us provide by side
we're receiving instructions from the bar from the supplier
a request that we purchased see therefore there there's they are the
instructing
party in that relationship therefore we have certain obligations
and that's when the itself my wife's phone company yet
over the last JP Morgan because they need to be opting to be involved
boarding supplies week obviously
access and
and is this just a a just want to comment on know that
and but I should go just a quickie for you and
how long did the whole process from inception to
implementation take
I'm not quite sure section is when he first started thinking about it all
got approval internal okay said side you have the time
yeah well how does he stand
coming some ash decided against it
instrument quite sure
spectacular roundabout we a
so that any agreement yeah Africa which is why
today the operation guys
it meant joke about
great okay but that up to the
online when we have started talk
that long good price
search process what right Howard
checked although quest it
side
think John of standard
it's a little bit longer I think that was pretty quick
check credit that they the process for initial discussion
with the buyer through to on-boarding supplies can't be several months
quite easily actually can I just
about personal question for tonya that process of getting approval
obviously this is a lot of assessment
just begun was in a bit particularly contentious
or and you mentioned working with your collection procurement
young that for any
frictions Trichet no no I don't
a cases a friction between
a rigid organization I think
want the challenges getting everybody on board
where on get momentum behind
that was force selected 13
shop discussion sorry Sun life
so that I guess thats just normal implementing anything
any new any change through that process
for Kenny when they are sick because
with we've heard a lot some in a short space of time about
some how these programs work and thanks very much for everyone is
provided us with questions for him thanks to get requests or
them what we're trying to do its cover
personal response to people we have managed to
to cover so
thank you very much to of presenters
and thank you to too large for sponsoring this
and teacher 1 percent in a question
going forward for the rest year dack has some
further events notably a annual conference which is coming up
very soon now and and invoice will
have a presence there so it weakened meet again there
and there are workshops on supply chain finance
and during the course of that two day conference and then we have another
practice P briefing and on the same subject
which we look at further aspects of it
can see there we also have various and international
10 and of course there will be a serious a further webinars
so look out for theirs which we will publicize
as and when they materialize
well thank you very much orgy for finishing and participating
and if you can spare a moment provide some
feedback on the weapon would be very grateful and
you can just select the red
feedback which it down on the bottom of and
and this facility to answer key questions for us will remain open
short while after weapon and
thank you to our senses and to all 25