Supply Chain Finance Moves to the Cloud

by Tom Roberts 0

It’s easy to forget just how quickly the cloud has permeated the enterprise IT ecosystem. Pause for a second and consider this. In 2008, Oracle’s Larry Ellison went on record saying this about the term “cloud computing”:

“The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?”

While cloud computing has been around for quite some time, its widespread adoption by the enterprise sector has been both recent and fervent. By 2020, research giant Gartner, Inc. predicts that a corporate “no-cloud” policy will be as rare as a “no-internet” policy is today. The firm also estimates that more than 30 percent of the world’s 100 largest IT vendors’ new software investments will shift from cloud-first to cloud-only.

Meanwhile, the supply chain finance network has grown overwhelmingly complex. More suppliers, more currencies and jurisdictions, more funders, more compliance and reporting requirements…the onslaught of “more” is driving companies to simplify and streamline when and wherever possible. Not to mention a critical need to optimize working capital to fund new innovation and competitive initiatives.

It’s a perfect backdrop for supply chain finance to move towards the cloud. Companies are demanding more nimbleness and agility from their supply chain finance solution providers. “How can we improve the agility of our business with your solution?” is a question that extends from the boardroom to the procurement team.

A cloud-based supply chain finance program accomplishes this goal by removing many of the IT limitations that exist with proprietary, on-premise-driven programs. The open architecture afforded by a cloud-based environment replaces lengthy system integrations with a simple implementation. It also enables a central hub for supplier education and onboarding, helping to streamline, standardize and expedite these activities and increase supplier adoption.

Additionally, cloud-enabled supply chain finance tools provide real-time visibility into critical supplier data across disparate categories and commodities, industries, geographies, currencies and account receivables trading information. What is the average day at which suppliers of a specific commodity trade an invoice? Which supplier categories are seeing high versus low program onboarding? Are there any patterns in suppliers’ trading activities that could impact a funder’s lending capacity? Knowing where and how to improve cash flow, and having the visibility and tools to execute efficiently, is the difference between a nominal optimization of working capital and freeing up $100 million, $500 million or even $1 billion in cash flow.

Keep in mind this visibility is often the result of big data at play. Backed by the vast computing power of the cloud, companies can leverage terabytes of financial and supplier data to gain a complete picture of supply chain finance activity. Funders can also access this information to gain a deeper view into supplier performance beyond what traditional performance metrics provide.

Finally, the cloud makes it easier to connect companies and their suppliers to a growing pool of funding sources – and, in PrimeRevenue’s case, all within a single platform. The value of this capability can’t be underestimated. Using a single cloud-enabled solution as a facilitator, a company can access multiple funding sources to cover multiple jurisdictions and currencies. If a bank exits a jurisdiction or decides to no longer engage in a supply chain finance program, the company can simply select a different funder already connected to the solution.

Supply chain finance is evolving. It’s becoming more data-driven, more analytical and more real-time. The cloud is powering this evolution, and the benefits will continue to be immense for all stakeholders. Leveraging the power, ease and scalability of the cloud, funders are able to expand their services to new customer segments, and companies and suppliers can more easily and drastically improve cash flow across the supply chain.