When one of your suppliers is short on working capital, and can't find low-rate financing, your Accounts Payable department is likely to get a call. Of course, you don't like to see any of your trading partners struggle with liquidity issues. At best, they might pass high financing costs on to you. Problem is, paying their invoice right now doesn't fit with your own working capital management strategy.
Solve your dilemma with Ariba Supply Chain Finance, a collaborative solution from the Ariba Commerce Cloud.
Ariba Supply Chain Finance connects you and your supplier in a mutually beneficial transaction with a third-party financial institution. The key is leveraging your investment-grade risk rating and credit worthiness to provide your supplier with access to affordable credit. As a result, your suppliers get a shot of liquidity. You maximize your working capital investments while mitigating supply chain risk. And the funder earns a fair rate of return. It's a winning proposition for everyone.
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Optimizing working capital without added supply risk.
Transfer your lower cost of capital to suppliers who are often subject to prohibitively high financing costs. You can optimize your working capital without hurting your suppliers, and avoid having their higher financing rates passed along to you in the form of higher prices. Through the Ariba Network, a third-party funder accepts your guarantee to pay an invoice by its due date. In turn, they'll pay the supplier early, at a reasonably discounted rate based on your cost of capital. You help your suppliers access a relatively inexpensive liquidity source, and the funder earns a fair rate of return.
How this solution works.
You transmit approved invoice information through the Ariba Network, the world's largest trading partner community of buyers, suppliers, and third-party lenders. Your supplier reviews the invoice online, and decides if they want to sell the receivable for early payment. If they do, a third-party funder advances them the invoice amount, less a low finance charge. At the invoice maturity date, you fund your bank account the full amount of the invoice, which is then transmitted to either your supplier or the funder, whoever is owed the money.
Deploying a quick and easy solution.
Executing supply chain finance transactions through the Ariba Network, you and your partners work together on a single, SaaS platform that's integrated with your existing back-office systems. This ensures information integrity, and provides real-time visibility into orders, invoices, and payments. And as part of the Ariba Commerce Cloud, it's easy to share best practices and tips with an online community of peers and thought leaders, too. If you need technical or adoption assistance, all you need do is ask.
With Ariba Supply Chain Finance, you and your suppliers can both have the working capital you need, while you collaborate on building stronger partnerships. But that's not all you'll find in the Ariba Commerce Cloud. You and your suppliers have ready access to other collaborative finance management solutions that may better suit your current situation, like Discount Management and Receivables Financing. Click on the links to learn more.
Request more information about Ariba Supply Chain Finance or other working capital management solutions.
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