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Supply Chain Finance – Room to Improve

January 23rd, 2008 · by Tim Minahan · 1 Comment · best practices, supply management

Last week Aberdeen published a new report titled “The 2008 State of the Market in Supply Chain Finance.” This report, an update to the 2006 study on the same topic, showed only a slight increase in practical activity in Supply Chain Finance (SCF). Although the level of interest is high, Aberdeen’s research cites that companies are still struggling with the structuring and implementations of SCF programs.

This report is the first time this year Aberdeen interviewed both buyers and suppliers. Interestingly, both sides reported that the lack of knowledge of the supply chain finance best practices is the key challenge to optimizing their SCF practices. Well, good news for everyone as Aberdeen embraced the challenge and focused the report on defining Best-in-Class companies and provided actions for those wanting to achieve this status. The four key areas Aberdeen uses to distinguish Best-in-Class include: average cash conversion cycle, relative improvement in the cash conversion cycle over the past year, days payable outstanding and days sales outstanding. As a preview, the average cash conversion cycle of Best-in-Class organizations is 20 days shorter than the average and 85 days shorter than laggards.

In the next few blog posts, I’ll provide more insights into this report as well as required actions for those wanting to evaluate their SCF program. In the meantime, you can download a free copy of the report by clicking here.

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1 response so far ↓

  • 1 Lisa Peterson // Mar 18, 2008 at 12:17 pm

    Technologies like discount management and supply chain finance have created lower DPOs, DSOs and lower unit costs for these companies by automating the payment exchange process, related documents and other information between buyers and sellers. The majority of large organizations are investigating or putting in place Supply Chain Finance and or discount management programs to improve financial metrics and lower end-to-end costs.

    Often wonder how the early adopters got started? How they made the change from paper to electronic to working capital optimization? PayStream Advisors, Inc. is hosting a conference this June (9 – 11) in Orlando, Florida, that can eliminate the lack of knowledge of supply chain best practices that both sides admitted to having. It is a two-day educational conference focused on invoice efficiency and working capital optimization in Purchase-to-Pay automation. It will focus on electronic invoicing, discount management and supply chain finance.

    Here you can attend educational seminars with conference faculty, network with your fellow financial colleagues and attend roundtable sessions where you ask questions and receive answers. Learning new ways to revamp your current accounts payable processes will be the next step in building your company’s bridge between working capital and AP efficiency.

    Register now at http://www.paystreamsummit.com.

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