Supply chain finance is a part of fintech that doesn't share the same limelight with other sectors like consumer lending or consumer payments. Throughout history, companies have typically turned to one or two financial providers to help them free up money in their supply chains.
That's all changing with companies like PrimeRevenue, a supply chain finance platform for buyers and sellers that also has 50 different financial providers baked in. Based in Atlanta, the company works globally across borders and currencies. Tom Roberts heads marketing, and is the guest today on the Tearsheet Podcast.
Roberts talks about the world of supply chain finance, trends and opportunities, as well as his own marketing career in fintech that includes stints at DST, ETrade, CashEdge, and Fiserv.
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Below are highlights from the episode, edited for clarity.
What's driving companies to adopt supply chain financing?
For larger enterprises, it's trying to find ways to optimize their cash conversion cycle, or the time between when they pay and get paid. The more you can optimize that, the better off you are. Most of the companies we work with are trying to respond to pressures in the marketplace, so they have strategic initiatives to drive innovation, respond to changes in customer demand and competition, or find growth through acquisitions. So, they're trying to fund strategic initiatives with supply chain finance. For large enough companies, supply chain finance can deliver cash flow gains of hundreds of millions of dollars or billions of dollars.
Can you give an example of a company that used supply chain finance to unlock this type of cash?
Auto parts manufacturer, Mann + Hummel, is based in Germany and recently won an award for their program. They supply auto parts to ORMs and the aftermarket. They've used supply chain finance to really grow their business -- they've doubled in size in the reasonably short amount of time we've been working with them. They've built a new corporate headquarters in Germany and an innovation center in the U.S. that's helped drive the overall growth of the business.
Do you see yourself as a technology or finance company?
We have to be a solutions company, so technology underpins everything we do. We operate in 70 countries, in 15 different languages, and more than 15 different currencies. So, we need a technology platform to do what we do in a scalable fashion. That said, if we were only a technology company, we wouldn't have the business we have today where we plug in 50-plus banks and non-bank funders into our platform.
So, we basically sell a reasonably sophisticated financial product and financial solution, but all of our consultative solutions people, our data and analytics, and our experience gets wrapped around the technology to provide our total solution.
What's the impact of providing a multi-lender solution?
As with every company I've ever worked with, we don't have a greenfield market and have plenty of competition. We compete primarily with some of the world's largest financial institutions, like Citi, Wells Fargo, and Deutsche Bank. Banks typically make decisions based on their credit risk, the regulatory climate and geography. We've seen multiple instances where very large lenders pull out of specific jurisdictions or pull out of certain programs.
If you're a large enterprise running a program with hundreds or even thousands of suppliers on it, that disruption can be very damaging to your own financial position, as well as to the health and responsiveness to your suppliers. So, we've put together a multi-funder model to mitigate against that risk and to provide program sustainability. We're not a great fit for companies that want to work with just one bank.
