 Markets and climate solutions firm STX Group has announced the launch of a working capital solution designed specifically for environmental certificates.
The new solution comes in the form of a Special Purpose Vehicle (SPV), which offers organisations working capital funding to help them meet increasing requirements for ESG targets. The SPV differs from traditional financing because of the ability to finance both liquid and less liquid certificates, as well as offering higher advance rates. The SPV takes temporary ownership of the environmental commodities, which can open up new, “balance sheet friendly” treatment of financing, according to a December 5th press release. STX Group hopes to leverage an extensive client base for counterparties looking to finance their environment certificate holdings, allowing lenders to add collateralized credit exposure to highly rated counterparties to their portfolio. Bart Wesselink, Chief Financial and Risk Officer of STX Group, said “The launch of this new solution provides immense opportunities for our customers and counterparties as they increase their activities in environmental commodities markets. We are delighted to work with them by providing them with more efficient and secure market access.” The launch of the SPV follows the introduction of a series of solutions by STX Group centred around accelerating the renewable energy transition. These include the April 2023 launch of a borrowing base facility, where global banks recognised a broad base of environmental commodities as collateral for the first time, and the unveiling of the STX Group carbon fund in October 2023.  Sustainability and innovation were top of the agenda for the more than 300 experts and practitioners who came together again for the Working Capital Forum Europe 2023 on November 28th. Against the backdrop of the beautiful Beurs van Berlage building – but in the shadow of serious economic challenges – they shared best practices, explored cutting-edge technologies and discussed where next for a trend that just keeps growing, ESG-linked SCF.
As Working Capital Forum CEO Mike Hewitt said, “Today is about all of us working together, bringing support to developing economies and building more sustainable supply chains.” <<READ MORE>>  Inventory management solutions – in which a trading company buys stock from suppliers and sells it on to buyers exactly when they want it, for a small fee – enables treasurers to use capital more efficiently, create savings for procurement and improve corporates’ resilience. But too many companies wait for things to go wrong before they explore the structure, Dhiresh Dave, Head of Product, Structuring and Legal at trading company Falcon Group (above right), told the Working Capital Forum Europe 2023 in a session. moderated by Danfoss Climate Solutions CFO Niels Behrensen (above left).
Eugenio Cavenaghi, Head of Working Capital Advisory and Structured Trade at Santander CIB (above centre), recounted how the treasurer of a major car manufacturer rejected the bank’s pitch for inventory management services once the conversation turned to costs. Yet nine months later – when procurement problems such as factory shutdowns and component shortages hit the CFO’s desk and were fed back down to the treasurer – he called back and gave the green light. Cavenaghi says the lesson for treasurers is that “if there’s a bottleneck in the supply chain, don’t wait until the problem goes all the way up the corporate and then back down to you. Be the hero.” Inventory management solutions create the greatest benefit in long supply chains or where a supplier wants a quick deal to hit sales targets and a buyer doesn’t want to hold excess inventory, Cavenaghi explains. And although the structure has been used in certain segments, such as consumer electronics, for decades, it offers huge potential for other categories. Inventory management solutions are now in the “early adopter” phase that supply chain finance (SCF) went through 15 years ago, argues Cavenaghi. Within five years, “every corporate in every industry” will be using it, Dave predicts.  The best run organisations enjoy excellent balance sheet health. This is no coincidence, Jakob Ruden, Partner at McKinsey & Co, told the Working Capital Forum Europe 2023.
Working capital performance touches every part of a business, from sales and production to supply chain and procurement, so an integrated approach with a keen eye on trade-offs is essential, he argued. But knowing where to start can be challenging. For companies looking to transform their working capital, Ruden made the following five recommendations:
 By providing affordable working capital very early in the production cycle, purchase order financing helps strengthen buyer-supplier relationships, improve supply chain resilience against inflation and other shocks, accelerate investments in sustainability, and plug the global trade finance gap, attendees at the Working Capital Forum Europe 2023 heard.
Emerging market suppliers often struggle to access trade finance on the their financial metrics alone. But they typically have strong relationships with their buyers, which have a wealth of data around how suppliers have delivered in the past, noted Carmen Marin, COO at Twinco Capital. So the supply chain finance platform had an epiphany: “Why don’t we measure suppliers based on what they know how to do, which is to supply?” To build a holistic picture of suppliers, Twinco analyses their historical performance from three angles: their on-time, good-quality delivery; their financials; and their environmental, social and governance (ESG) credentials. Based on this, it is able to initially advance to a supplier up to 60% of the value of a purchase order, followed by 20% on shipment. The buyer repays Twinco when the final 20% payment has been made. Unlocking working capital early in the cycle improves supplier – and supply chain – resilience against price volatility and inflation, Carmen argues. For example, when cotton yarn prices surged 50% in 2022, textile suppliers were able to procure early and lock in lower prices. Purchase order finance can also enable suppliers to invest in sustainability and gain a strategic advantage. It has helped Pakistani denim maker Denim E progress towards its goal of being 100% sustainable within five years, according to its CEO Azhar Khalid. For example, funding from Twinco helped it commission six months ago a water treatment plant that recovers 75% of the water used in manufacturing. “In all these initiatives, there is somewhere Twinco at the back that is helping this happen,” he said. The data that underpins purchase order finance strengthens buyer-supplier relationships and helps buyers to be more proactive in managing that relationship, according to Eduardo Zamácola, President of Spain’s National Association of Textile, Accessories and Leather Trade. Buyers often don’t have the time or expertise themselves to understand all the risks associated with a supplier, such as its ESG performance, so having a third party monitor and report on these gives them confidence and security of supply.  Supply chain finance is at risk of stifled by regulatory changes that aim to cement obligations about payment terms for suppliers or improve companies’ disclosure of working capital finance, attendees to the Working Capital Forum Europe 2023 heard. There is a danger that proposed amendments to the EU’s Late Payment Directive fail to recognise the realities of commercial trading and the positive impact that SCF can have, argued Luna Owen, Associate at Sullivan & Worcester. The changes would introduce a maximum payment term of 30 days that buyers cannot contract out of and interest would automatically accrue on any late payment, Owen explained. A late payment compensation fee would also be payable to suppliers. Sean Edwards, CEO of the International Trade Forfaiting Association (ITFA), described the proposals as “very blunt” and warned that “the opportunity for the financial system to provide SCF is really going to get squeezed” if they become law. Frederic Gits, Group Credit Officer, Corporates at Fitch Ratings, also cautioned that because the balance of power between suppliers and buyers remains the same, eliminating flexibility around payment terms could result in suppliers instead having to accept lower prices, or with alternative solutions being engineered that offer less transparency than SCF. Eleena McDaniel, Director of Global Accounting and Reporting at Lots Group, questioned how the proposed late payment fee would be enforced and raised concern that the changes would be toothless. Edwards also flagged that not all small and medium-sized enterprises (SMEs) are suppliers. In some supply chains – such as food and beverage – small buyers may lose the currently generous payment terms they currently enjoy with large multinationals that supply them. Although Working Capital Forum research shows that 42% of large companies report they use SCF and 38% report using invoice financing, very few are reporting in the level of detail required by Financial Accounting Standards Board (FASB) rules, added Llewelyn Mullooly, WCF’s Head of Analytics. In several recent scandals – such as that of Brazilian retailer Americanas – reverse factoring has been found to play a role in helping companies hide debt, noted Gits. This has encouraged companies to improve their reporting to reassure investors. But such incidents create “bad press” for the structure, he said.  The results for the 2023 Working Capital and Supply Chain Finance Awards are now in. On the eve of this year’s Working Capital Forum, a stellar line-up of winners was named at a special awards dinner at the Sofitel Grand Hotel Amsterdam. The awards, sponsored by American Express, celebrate companies that have taken working capital management and supply chain finance (SCF) in innovative new directions while raising standards to fresh heights and delivering concrete benefits for themselves and their trading partners. This year was no different, with winners demonstrating ingenuity and excellence as they engineered more robust and sustainable solutions and found inventive ways to tackle economic and regulatory challenges. Gold Award Otto Group took away this year’s Gold Award for a working capital programme that impressed judges on nearly every level. The German e-commerce company demonstrated creativity and commitment to its supplier base as it navigated a challenging regulatory environment to extend its SCF programme to Bangladesh, where it won 100% supplier buy-in. The programme also won Otto the Best Use of Supply Chain Finance award. Innovation Creativity was a running theme across many of this year’s entries, but a trio of companies – Robust International, Orbian and Evolution Credit Partners – showed that the best innovations come from collaboration. They won the Working Capital Innovation Award for engineering a cutting-edge programme that was built around a buyer without an investment-grade credit rating and used virtual payment card technology. Innovation also helped agricultural machinery manufacturer AGCO win the Best Use of Receivables Finance award for incorporating securitisation, factoring and receivables insurance in a programme that spanned a dizzying number of jurisdictions and delivered real working capital and cash flow benefits. SunExpress Airlines broke new ground – for both itself and its peers – by delivering the world’s first export credit agency (ECA) guaranteed financing for pre-delivery payments towards new aircraft at a challenging time for the industry. This won the Turkey-based airline the Best Working Capital Funding Solution award. The Boohoo Group – winner of the Best Use of Technology for a Working Capital Project award – overcame internal hurdles to roll out an innovative end-to-end early payment solution for its mostly emerging market SME suppliers. And South Africa’s Omnia Fertilizer was Highly Commended for its Use of Supply Chain Finance for a programme that gives its suppliers the freedom and flexibility to individually negotiate terms and rates. Sustainability Momentum continues to build for sustainable supply chain finance, with several winning entries this year having an environmental, social and governance (ESG) element. The best of these was from Japanese tyre maker Bridgestone, whose rapid scale-up of a demonstrably successful sustainable SCF programme won it the Best ESG Working Capital Initiative award. Teva Pharmaceuticals was also Highly Commended for an ESG Working Capital Initiative that saw it offer lower-cost SCF funding to SMEs in Israel based on sustainability scores provided by independent ratings provider EcoVadis. The Best Use of Payables Finance award went to Finland’s Metso Oyj for a programme that rewards suppliers in Turkey for investing in more sustainable practices – and offers them unusually comprehensive advisory and practical support along the way. Execution Many of this year’s entries demonstrated impeccable execution, with solutions yielding impressive efficiencies and being implemented at top speed. Pearson won the Best Cash Forecasting Initiative award for a software-as-a-service solution that was built in just 30 days and helped the publishing and education company respond quickly to difficult macroeconomic conditions and cut its borrowings by over $100 million. The Best Integrated Working Capital Project award went to German online retailer Zalando for transforming its invoicing processes with a rapidly implemented plug-and-play solution that has resulted in much faster invoice delivery and settlement and stronger cash flow management. Royal Cosun was also Highly Commended for the Use of Payables Finance due to its skilful execution of a classic supplier finance programme that – in keeping with the Dutch agricultural cooperative’s founding ethos – puts suppliers first. Working Capital Champion Finally, Siemens veteran Douglas Schoch was honoured with the Working Capital Champion award for helping pave the way for many of the innovations celebrated in this year’s awards. As well as co-developing Siemens’ groundbreaking SCF programme in 2008, he continues to work tirelessly to advocate for the benefits of SCF and to educate and inspire his peers.  Driving growth and protecting margins during times of economic uncertainty requires smarter inventory management and a more holistic approach to finance, supply chains and sustainability, according to Professor Bram Desmet, Professor of Operations and Supply Chain at Vlerick Business School.
With firms now facing the challenges of conflict, economic slowdown and increasingly unpredictable demand, strengthening supply chains and right-sizing inventory to optimise working capital should become more urgent priorities for Supply Chain and Finance functions, he argues. The COVID-19 pandemic “created a huge mess” for companies’ supply chains, with many paying inflated prices to build up huge inventory stocks that continued to weigh on cash flow as recently as six months ago, Desmet notes. “It was sheer panic and improvisation. It was the opposite of professional supply chain management.”  The 2023 Working Capital Awards shortlist has been published and features 12 corporations recognised for their excellence in Working Capital Management, all of which will be either winners or highly commended when the results are announced on 27 November.
The Awards are sponsored by American Express and organised by The Working Capital Forum, a networking community for treasury, payments and procurement professionals, and will be presented at a gala dinner on the eve of its major conference, Working Capital Forum Europe. ‘This year’s Working Capital Awards attracted entries in greater numbers than ever before,’ said Mike Hewitt, CEO of The Working Capital Forum. ‘Our independent judging panel saw submissions from companies across the world, many of which are doing amazing work in managing working capital, not just for themselves, but across their supply chains.’ Supplier Negotiations, Cash-to-Cash Cycles, and More: Insights from The Working Capital Forum’s latest Round Table in Palo Alto
 European Commission: Tackling Late Payments By Llewelyn Mullooly On 12 September 2023 the European Commission released a new proposal for regulating late payments in commercial transactions that aims to standardise supplier payments across the EU. While important legal details are missing, the regulation is sweeping and includes a strict maximum payment term of 30 days. The proposed regulation has emerged in response to shortcomings in the current Late Payment Directive. Among these shortcomings are the significant differences in the enactment by member states, which has resulted in a lack of consistency. Rather than a directive, the new proposal is for EU-wide regulation, which would apply automatically across all member states. While the current directive sets a maximum term of 60 days, it allows for terms beyond this limit where they are not “grossly unfair”. In practice, the ambiguity of this wording has led to payment terms well beyond 60 days. The proposed regulation aims to correct this shortcoming and ensure effective enforcement mechanisms similar to the Directive for unfair trading practices in the food chain.
The European Commission has made it clear that the aim of the regulation is to reduce the financial burden of late payments on smaller businesses. The commission believes that shorter, standard payment terms will save EU firms five man-days of debtor-related work, equivalent to almost €9 billion each year.  Working capital finance provider LSQ and supply chain platform Infor Nexus have announced a partnership to provide suppliers with access to early payments through an LSQ FastTrack® supply chain finance programme.
As part of the strategic partnership, LSQ is providing funding, payments automation, credit management and a range of financial insights for effective working capital management. These will sit on Infor Nexus’ platform, so that suppliers can access early payments instantly. The partnership is currently being piloted by international suppliers of United Legwear, an existing LSQ supply chain finance customer. Other buyers are in the early stages of integration to enable global suppliers to join their supply chain finance program. The partnership will make it easier for global suppliers to access supply chain finance programmes, according to LSQ Chief Revenue Officer Vikas Shah. "The agreement opens up a world of opportunity for global suppliers to seize the advantages of LSQ's supply chain finance program and improve their working capital - all within a system they already use with their buyers," he said. "We know traditionally, supply chain finance programs - especially those in the retail space - are difficult for non-U.S. suppliers to access. With this new partnership, we are removing the barriers created by inventory-in-transit, cross-border payments, and international procurement processes. "Traditionally, international suppliers encumber their accounts receivable by factoring their invoices or standing up cumbersome lines of credits with their local banks," said Shah. "All of that friction and paperwork is now eliminated with a seamless procurement, payments, and finance solution provided through a single, unified user experience." Ted Barba, Vice President of Global Supply Chain Finance Solutions at Infor Nexus said "Providing efficient early payments through a supply chain finance program to support cash flow has been one of the largest needs of both U.S.-based companies and their international suppliers for some time. "Supply chain issues, higher inflationary pressure and increased interest rates have greatly exacerbated the problem. By partnering with LSQ, we have created an easy-to-use solution that will strengthen global supply chains and support growth."  Visa has announced a $100 million initiative to invest in companies focused on developing generative AI technologies for commerce and payments.
Built on Large Language Models (LLMs) to create artificial intelligence capable of generating text, images and other content from large sets of existing data, generative AI is increasingly used for content creation purposes. Visa’s generative AI initiative aims to look past existing use cases for generative AI to understand its long-term impact on payments and commerce, according to Visa Inc’s Chief Product and Strategy Officer, Jack Forestell. “While much of generative AI so far has been focused on tasks and content creation, this technology will soon not only reshape how we live and work, but it will also meaningfully change commerce in ways we need to understand,” he said. The initiative will be led by Visa Ventures, Visa’s global corporate investment arm, which has been driving investment in payments and commerce technology since 2007. Head of Visa Ventures at Visa Inc, David Rolf, said “With generative AI’s potential to be one of the most transformative technologies of our time, we are excited to expand our focus to invest in some of the most innovative and disruptive venture-backed startups building across generative AI, commerce and payments.”  RBC is to use Kyriba's working capital platform to offer payables and receivables finance to corporate clients in Canada.
“Optimizing working capital and liquidity with greater speed, efficiency and integration with diverse platforms is critical to the success of large enterprises,” said Lisa Lansdowne-Higgins, Senior Vice President, Business Transformation and Deposits at RBC. “By working with Kyriba, we look forward to providing our business clients with a more robust suite of supply chain finance solutions to enhance their working capital positions.” _______________________________________________________________________________________________________________________________________________ Kyriba is a sponsor and exhibitor at Working Capital Forum Europe, Amsterdam, 28th November.  HSBC is starting the global rollout of HSBC TradePay, the document-free supplier finance solution that it soft-launched in Singapore last year.
With a claimed loan processing speed of under a minute, the solution allows companies to upload a payment file and have their suppliers paid directly from an agreed loan that is only drawn down as each supplier is paid. Once each payment is completed, notifications are automatically sent to both parties. Tradepay is now live in Hong Kong, Singapore, and the UAE, and will be available in the UK from October, in India and Australia from November, and in additional countries in 2024. Bhrigu Singh, Chief Product Officer, Global Trade and Receivables Finance at HSBC said: “Our global trade solutions are designed to help our clients trade with confidence and unlock working capital. In line with this approach, HSBC TradePay is an innovative digital solution that enables companies to seamlessly drawdown trade loans and pay suppliers, improving their working capital while building stronger relationships with their trading partners.”  Mondu: Partnering with Spryker B2B payments company Mondu and composable commerce platform Spryker have formed a partnership to provide a new B2B buy-now-pay-later (BNPL) platform.
The platform aims to offer flexible payment solutions to a wider range of B2B buyers whilst helping businesses increase revenues from online sales. The solution will integrate Mondu’s BNPL solutions with Spryker’s PaaS marketplace creation platform via API-based modules, allowing Spryker customers to access new features for B2B payments, according to the companies’ August 29th press release. These solutions include payment upon invoice, Single Euro Payments Area (SEPA) direct debit, and instalments. This collaboration furthers both Mondu and Spryker’s goals of helping businesses grow, according to Matthias Letzeller, Mondu’s Head of Partnerships. “We see our partnership with Spryker as an ideal fit for us at Mondu, due to our shared mission to help other businesses focus on growth. We both support B2B companies in scaling their online sales through the best online experience for their customers,” he said. “Spryker has built a great platform to create a wonderful ecommerce journey, and with Mondu that journey continues with the best payment experience. Combined, we can help businesses supercharge their sales, increase revenue, improve cash flow and operational efficiency.” Manishi Singh, Spryker’s Senior VP of App Composition Platform added, "We are thrilled to welcome Mondu to the Spryker partner ecosystem. Our shared vision of efficient innovation will enable businesses to improve their customer experience while maintaining the flexibility needed to adapt to changing customer needs. “By joining together Mondu’s seamless payment solutions and Spryker’s best-of-breed composable commerce approach, enterprise customers can anticipate an unparalleled purchasing experience. This partnership highlights our commitment to providing enterprises with the tools and support they need to accomplish their current and future business goals.”  Standard Chartered has launched a new investment product linked to receivables finance assets originated by Singapore fintech Olea. The bank will target high-net-worth individuals in Singapore, Hong Kong and Dubai.
The launch marks a milestone for Olea, which began life in 2021 as a joint venture between Standard Chartered and Linklogis with the aim of 'bringing together institutional investors seeking opportunities in an alternative asset class with businesses requiring supply chain financing.' The launch comes after last year's announcement of a partnership between Olea and Vayana Network which later launched a receivables financing program for an undisclosed 'large Indian manufacturer.'  Visa and virtual payments technology provider Conferma Pay have announced a four-year extension of their collaboration on Visa Commercial Pay.
Launched in 2020 to a select audience of early adopters, Visa Commercial Pay’s features and connectivity with invoice management platform are designed to help corporate businesses automate payments and improve cash flow. The four-year extension secures additional investment in Visa Commercial Pay’s suite of tools – the Visa Commercial Pay mobile app, Visa Commercial Pay Travel and Visa Commercial Pay B2B. It will also enable both organizations to expand the offering in Asia, Latin America and the Middle East. Visa Commercial Pay clients can look forward to new features like digital wallet tokenization alongside continued commitment to efficient payments, according to Gloria Colgan, Senior Vice President of Global Product Visa Commercial Solutions. “The pandemic exposed significant inefficiencies with traditional payment methods used by businesses,” she said. “Our collaboration with Conferma Pay brings together two leaders in their respective fields and the result is a far more efficient payments system. With our collaboration set to continue, more clients and end users will be able to take advantage of new features such as the digital wallet tokenization and hotel cards.” Jason Lalor, CEO, Conferma Pay added “The world has been increasingly moving towards more digitized payments and the launch of Visa Commercial Pay has supported this transition in the commercial payments environment. Our deeper engagement with Visa will help to rapidly accelerate the growth of virtual payments for businesses,” “We have a fantastic working relationship with Visa that has enabled the rapid delivery of software to simplify payments for businesses globally. Based on our shared vision for a more digitized payment landscape, our expanding network of B2B partners means that Visa Commercial Pay will continue to grow and remove more barriers to business.”  HSBC has invested $35 million in supply chain finance company Tradeshift.
The investment forms part of a new joint venture focused on developing embedded services across trade and e-commerce marketplaces, streamlining the flow of working capital across supply chains. Tradeshift and HSBC announced the investment as part of a funding round expected to raise at least $70 million. HSBC will invest the $35 million in two stages, and also join Tradeshift’s board. Other contributors to the funding round include AYTK Limited, LUN Partners Group. Fuel Venture Capital, Doha Venture Capital LLC, Notion Capital, IDC Ventures and The Private Shares Fund. All are existing shareholders. Tradeshift said that it planned to use the injection of capital to add more SaaS, B2B marketplace and embedded financial services, adding that it was also considering some acquisitions. Barry O'Byrne, CEO of Global Commercial Banking at HSBC, said “We are very excited to partner with Tradeshift to help businesses and their suppliers trade more smoothly using world-class technology and solutions that the joint venture will deliver. “This agreement supports our strategy of being a digital first bank, which includes our commitment to partnering with fintechs and embedding our solutions into the platforms of others.” Christian Lanng, CEO and Co-founder of Tradeshift, said “Our deepening partnership with HSBC delivers a strong foundation from which to scale and accelerate our vision of a trade network that creates economic opportunity for businesses everywhere. “HSBC’s reputation and global infrastructure bring instant credibility and broad appeal to any financial solutions brought to market through the Tradeshift platform. It’s transformative, and it’s a tremendous validation of the innovation and product architecture we have developed over the past decade.”  Almost nine in ten suppliers are confident that their customers will maintain purchasing volumes for the rest of the year, despite economic turbulence, according to new research from PrimeRevenue. The working capital firm surveyed a total of 1675 suppliers on its platform in Q1 & Q2 2023.
“Over the last three years, suppliers have encountered prolific disruption and recalibration. Now, moving into the second half of the year, there are more reasons for optimism than there were just months ago –though, for the foreseeable future, a great deal of uncertainty still remains,” said PrimeRevenue CEO PJ Bain. Among the report's main findings were:
The full version of the report is available here. |
