Revolutionizing Supply Chain Finance: Insights into the Future of Cash Flow

 Click on the image below to watch the interview on Global Finance's website (transcript below).

Joseph Giarraputo, Global Finance (JG)
How are the cash flow requirements of corporations evolving and what are the most significant challenges?

Gilbert Cordier, Societe Generale (GC)
Joe, I think 2024 was a challenging year for all players offering working capital optimisation solutions. Indeed, we came from a very dynamic market, post-COVID. We saw corporates with strong backlogs, looking for optimising their liquidity. And, at that time, corporates still took benefit of relatively low interest rates. So, suppliers got used to obtain financing at a low price.

Then corporates started facing an increase of inventories, spike of interest rates, challenging strongly the benefits of supply chain finance. But Joe, as always, in tough time, it's a matter of new opportunities. We saw corporates asking for more efficient SCF implementation: faster and seamless processes, even ERP-integrated solutions. And then even appeared the concept of embedded finance, which means: no need any more to have a dedicated platform, all relevant information and updates should be available through the corporates’ ERP system.

Then about the most significant challenges, I see the following ones:

1. Coordination of various stakeholders for making successful SCF programmes: Treasury, procurement, the banks, the suppliers, and even the platform providers when needed.

2. Blue chip companies are well served by banks for optimising their payables, but how could we support mid-cap companies which have strong needs and expectations as well? How could we fastly onboard suppliers, to speed up the ramp-up of the SCF programme offers, but also the cash flow optimisation of our clients? How could we better serve SMEs in terms of financing? We require exactly the same resources then corporates in terms of onboarding and due diligences.

JG: How do integrated SCF solutions help companies optimise trade flow?

GC: SCF implementation needs to be a seamless process. As we said previously, it involves various teams among the corporates: treasury, accounting, procurement, legal, IT and so on. So, you need to come with a robust and fully integrated solution, because those companies don't have a lot of scarce capacity for implementing this kind of project.

Second, make sure you won't reinvent the wheel. There are already existing procurement and cash payment solutions. So, make sure you are connected with those tools.

Then, if you have an integrated SCF solution, the benefits are obvious. As soon as the buyer validates an invoice, it is immediately available to the suppliers for financing, which strongly improves the liquidity of the latter one. Suppliers will always remain with their same bidding process. But you need to have an efficient process for validating the invoice, in a short timeline on the buyer side. And for that, having an SCF integrated solution will make financials available to the suppliers almost in real time. Therefore, it's a win-win solution for me: For corporates to optimise their working capital through a payment term extension; for suppliers taking benefit of monetising their receivables at a competitive pricing.

JG: Talking of benefits, tell us what benefits Societe Generale's innovative SCF solution provides for both suppliers and clients.

GC: At Societe Generale, our DNA, our mindset, is always to challenge the existing situation, the existing solution for the benefits of our clients. In other words, the key question is “How could we still improve our product offering to better serve our clients”? We have been very active in SCF for almost ten years with our in-house solution and platform.

But last year, we concluded that our clients deserve to have a larger scope of solutions in their end. We decided to make a partnership with CRX Market for offering a bulk agnostic solution to corporates, simply because it is a need, clearly expressed by some of our clients. This innovative solution allows our clients to outsource the IT project management with CRX, being able to implement in a record time a SCF solution, which is fully integrated with SAP, for instance. On their end, suppliers have access to CRX’ platform with a robust track record, a well-designed interface. And the connectivity that Societe Generale has developed with this FinTech, allows us to pre-finance invoices in a fully automated way, for the benefit of our clients’ suppliers.

Today, our clients can choose between our in-house platform or a third-party platform. But at the end, we still offer exactly the same service to our clients and their suppliers. 
It's all about optimising their working capital, improving their liquidity and strengthening their supply chain.

JG: Gilbert you've already mentioned FinTechs partnerships. How are they influencing SCF solutions and innovation?

GC: As you know, Joe, FinTechs have been active in SCF for more than a decade. We are not talking about startups, some players are well-established. These players brought a lot of innovative concepts, which challenge, actually, traditional bank and our banking solution. But this is good for the benefits of corporates, and the whole ecosystem. FinTechs are smaller organisations and therefore are much more agile than large banks to adapt to some corporates’ expectations, in terms of digital features for instance. Let's be frank, those FinTechs are shaking the SCF environment, but in a good way! For always rethinking about the most efficient digital process and tools and making sure that both of us, banks and FinTechs, offer the best-in-class experience to our clients. To be frank, I don't see FinTech as competitors, rather as true partners, who can make SCF solutions even more visible to corporates. At the end the partnership is obvious, because those FinTechs market the solution as a multi-funders platforms. And guess what? Who are the funders? Banks of course, this is our DNA!