Third-party solutions are growing on a global scale, challenging traditional banking business models. But why is this happening now, and how can buyers and suppliers benefit from this? Here are five reasons why you should consider a third-party solution when initiating or expanding a supply chain finance programme.
1. Digital transformation
Technological advancements, changing customer expectations, and emerging fintechs are changing the landscape of the financial services industry. Whilst many traditional banks still operate hard-to-transform legacy systems that have served the sector well for decades, new third-party solutions are utilizing the power of technology to achieve better, bigger results.
If you want to compete in today’s hyper-competitive climate, you’ll need to find a solution that is not only technologically robust, but is also continually changing and evolving to meet the demands of your supply chain. This is especially important when it comes to finding new ways of unlocking working capital in an uncertain and unpredictable economic environment.
2. No need for time-consuming processes
By harnessing the power of technology, third-party solutions make processes significantly easier. Instead of dealing with antiquated systems and time-consuming KYC processes, often associated with banks, you can now avoid these cumbersome tasks. For example, with third-party solutions, such as Taulia and , you can skip KYC processes and enrol each supplier onto your programme in 90 seconds – and therefore rapidly scale your programme.
3. Total transparency and visibility
The benefits of using third-party solutions to send invoices are also plentiful, as technology continues to revolutionize the procure-to-pay process. By choosing a third-party solution, you will get better visibility into your invoice processes, faster approval time on invoices, and more flexibility on how you manage working capital. This means your supply chain finance programme will be more impactful and most importantly you’ll increase supply chain health.
4. More economical to implement – in the long run
British organisation ACCA, the Association of Chartered Certified Accountants, analysed a number of key factors when implementing a supply chain finance programme. In the 2014 report, ACCA pointed out that third-party solutions are often associated with costs – such as software, IT platforms, subscriptions – that banks do not tend to charge. Whilst we know that bank programmes may cost less in the short-term, third-party solutions provide much more value in the long run. For example, reducing admin work so staff can focus on more strategic task and onboarding more suppliers than a bank-led SCF programme ever could.
5. Plenty more benefits…
We could stop at five, however, there are plenty more benefits of using a third-party solution when starting or growing your supply chain finance programme:
- Less and easier administration work.
- Faster payments at a lower cost over time.
- Buyers can manage their payments more efficiently.
- Improved supplier relations through early payments.
- Buyers can manage their working capital more effectively.
- Opens new opportunities for dynamic discounting and invoice automation.
Now, it’s down to you to realise the benefits of using a third-party solution when initiating or expanding a supply chain finance programme. The next steps are choosing a solution that meets your specific supply chain and working capital requirements – over to you.