C2FO gives on and off-balance sheet options for early payments to suppliers in need.
As suppliers struggle in the COVID-19 economic environment, getting cash to them quickly can be a lifesaver, and even better is letting them choose the rate that’s most suitable for their circumstances.
- At a recent NeuGroup virtual meeting, a major retailer described how C2FO’s unique platform gives even small suppliers ready access to a flexible, in-house, early funding program or supply chain finance (SCF) solution.
Cash management tool. By using the C2FO platform, companies can employ their own cash to fund early payments to their suppliers in return for a discount; or suppliers can choose a dynamic SCF option funded via a banking partner Both ways guarantee early payments.
- “It’s a nice mixture of having off and on-balance sheet programs, and being able to adjust and navigate the different needs—both supplier needs and corporate needs—in the event we want to reallocate that cash somewhere else,” the senior director of global treasury said.
Uptick in demand. The pandemic has increased demand for C2FO’s platform, especially for the company-cash option, according to Jordan Novak, SVP of market innovation at the Kansas City-headquartered fintech.
- The SCF rate is attractive for suppliers, but there are significant onboarding hurdles, whereas onboarding to a company’s internal offering is fast and easy.
Slice and dice. The company provides the yield it seeks, i.e. the discount suppliers give for early payment, and the available cash. C2FO’s platform uploads approved invoices and suppliers log in to set offers for early payment. The fintech’s proprietary algorithms match suppliers’ offers to the company’s desired rate of return. For example, if the target rate is 2%, one supplier may offer 1.5% and another 2.2%, and the technology aggregates all offers to the desired rate, resulting in a higher volume program.
- C2FO provides the company’s ERP with the discount and new pay date.
- The company still pays its suppliers directly, only faster.
- The platform eliminates the need to segment suppliers, as this happens automatically when suppliers name their rates through C2FO.
- C2FO is able to create programs for small and medium-sized companies, women-owned, minority-owned and veteran-owned businesses. The major retailer was able to craft these programs for its suppliers overnight.
- “We can slice and dice different groups of suppliers and have different targets or minimal rates,” the member said.
Win-win. C2FO facilitates the company’s early payments to suppliers, and it’s a boon to those in critical need of cash.
- Suppliers can pursue early payment across multiple geographies on the same platform while staying compliant with tax regulations globally.
- For companies, the cloud-based platform automates what previously could have been hundreds or even thousands of negotiations with suppliers, providing seamless collaboration among companies and their trading partners.
- “It improves our cash position and return on cash on the margins, and where it’s being used, it is definitely a benefit to P&L,” the retail treasury member said.
Here’s a slide summarizing the reasons the retailer chose to use C2FO’s platform: