Deborah R WilsonI have to admit I’ve felt a bit awkward about posting a clever (or at least an attempt at clever) entry in my blog these past few days, given the stress of the financial markets. I don’t want to be negative, but seeing friends and family struggle with housing costs, sinking retirement accounts and other worries pulls at my heart.
Procurement is squarely in the hot seat today. After all, we are well-placed to improve our organizations’ bottom line. But rather than repeat the “cost cutting” platitudes here, which are important but already getting old, I suggest thinking of other creative ways to help your organization and your suppliers get through these times. One intriguing idea is a new offering from Quadrem and Gresham computing – which boosts e-invoicing with a systematic alternative to for vendors to get paid early. I know, I know, its rev 10 of the idea of injecting supply chain finance into supplier collaboration tools. But hey, given the current economic environment, if Gresham really has financial institution partners that have money to loan, well – maybe this idea will finally take off.
Category: Cost Cutting E-Procurement Supplier E-Invoicing Tags:
3 responses so far ↓
1 Nobody October 7, 2008 at 4:23 pm
Isn’t that the ePlus idea? Help procure the item and also provide the financing to buy it?
2 Debbie Wilson October 7, 2008 at 5:33 pm
Ahhhh no It’s not. The idea is that a third party (in this case Gresham) offers tools/links to allow a seller to request early payment on an invoice from a third party bank. The bank pays all or part of the invoice – if the buyer consents – and then the buyer pays the bank later. This transaction allows the bank to factor in the buyer’s credit rating into the rates they pay the seller. Its like accounts receivable factoring.
Here’s an example. Let’s say I work as a buyer for a retail chain. I buy merchandise for resale from Joe’s sweaters – and we exchange documents/collaborate through Quadrem. Joe just completed a $10,000 order. My payment terms are net 90. (Times are tight, remember?) Joe needs the money quicker. He goes on Quadrem and fills out a form that is then sent to one bank (maybe more, I’m not sure on this point) asking that the invoice is paid early. Bank ABC offers to pay Joe this week – but will give him only $9500. The remaining $500 is in effect their “fee.” If my company agrees, all we do is change our remit to address and name to Bank ABC. In 90 days, we pay as usual, just to a different party. So the net is, Joe gets his money early, I get to pay slow and the bank makes a few bucks. My understanding of what ePlus does is that they finance the equipment, rather than a bank. I would imagine that ePlus would finance only certain things – assets – where this rev 2 factoring could be used for anything.
3 nobody October 8, 2008 at 9:37 am
The post stated that the proposition “boosts e-invoicing with a systematic alternative to for vendors to get paid early.”
I suppose I should have understood that fancy phrase to mean “by golly, here’s yet another way to factor receivables”, but I didn’t.
The source article avoids the term “factoring,” too, so I guess you’re forgiven
Must be some marketing reason why “factoring” is an undesirable word.