Creating Opportunities for Competitive Advantage

In the last edition of TMI, we explored the elements, which comprise the financial supply chain. We looked in some detail at the order-to-cash (receivables) and purchaseto-pay (payables) processes and how these can be optimised to create internal efficiencies, reducing the number of cash days for a company and therefore working capital requirements. The benefits of automating internal processes are not restricted to internal efficiencies. Reducing the working capital requirement enhances the balance sheet and reduces the need for short term borrowing, improving financial ratios and therefore increasing the ability to obtain financing for more strategic purposes. Furthermore, once a company has achieved good visibility over their order-tocash and purchase-to-pay processes, particularly the former, receivables at different stages in their life cycle, including purchase orders and invoices, can be used as a source of financing. With risk pricing very high for many corporates, and demand for credit vastly exceeding supply, particularly for lower-rated firms, tapping into the financial supply chain is an increasingly important means of sourcing finance. At ING, we have over 40 years experience of providing both preand postshipment financing to corporates of all sizes and industries. One of the important distinguishing factors of our financing services is that we assess our clients not just on their past, but on their future too. 2009 is likely to be a difficult year for virtually every organisation, which could further damage corporates’ ability to raise finance. However, at ING, we recognise the challenging environment in which every company is operating and look at their strategy and prospects as well as recent and longer term performance. In consequence, supply chain financing with a financial partner that has the vision and balance sheet to support a company over the long term could mean the difference between success and failure during the months ahead. In this section of the Guide, we explain some of the different ways of unlocking value from the financial supply chain and how they can contribute to an appropriate and flexible financing strategy. In addition, we look at some of the new and evolving opportunities for supply chain financing