Information technology company SAP Ariba and supply chain financing platform PrimeRevenue have united to deliver a multi-funder supply chain financing platform as part of an integrated source-to-pay process.
Even though the health of the supply chain is largely dependent on timely financing, the norm is for the two to be completely separate entities. The goal of the collaboration is to ensure that companies have the funds available to pay for supplies when they need them.
That is not always the case. Companies often find themselves short of money even though they have more than enough coming – eventually. The key is to create a system that optimizes cash flow by allowing buyers and suppliers to collaborate on purchase orders, invoices, discounts and supply chain financing.
“We do very different things but they are also very connected,” SAP Ariba Senior Director of Marketing Drew Hofler said. “SAP Ariba connects buyers and suppliers through the largest B2B network.”
Mr. Hofler said SAP Ariba has been building out its suite of solutions by maximizing existing buyer/seller relationships. The Ariba Network is a cloud-based community allowing companies to buy, sell and manage cash. Other Ariba networks allow business financing professionals to network and share best practices.
Ariba Pay is one SAP Ariba solution. It gives visibility into the timing and details of payments. Dynamic discounting provides incentive for buyers to pay early.
It makes perfect sense to partner with Prime Revenue, Mr. Hofler said.
“PrimeRevenue is another tool in the toolbox for buyers wanting to remove liquidity risk from their supply chain while holding onto their cash,” Mr. Hofler said. “Their strength is they’re a great, multi-funded platform which is the most used and robust in the market.”
While the need for working capital has always been there and now is estimated to be $1 trillion annually, Mr. Hofler said SAP Ariba still had to calculate their entry into the financing side.
“We had been looking for a number of years, and it was too early to get into supply chain financing, but the timing was finally right last year. We did our due diligence and confirmed PrimeRevenue is a leader.”
“Just as important, the technology fits.”
And that technology is constantly improving.
That $1 trillion figure is fed by a growing need around the world as globalization’s roots run deeper. The dearth of reliable financing options is especially acute in many emerging markets, Prime Revenue’s Tom Roberts said.
“It’s immense, but there are challenges for supplier financing.”
PrimeRevenue offers a variety of financing options for those companies and have seen massive adoption in emerging markets, Mr. Roberts added.
PrimeRevenue’s access to dozens of funding sources provides security and prevents over-reliance on one source, Mr. Roberts said. That is an asset during regional recessions.
“We can bring banks in and out as needed.”
SAP Ariba’s cloud technology further helps emerging market companies by simplifying access to and functioning within the network, Mr. Hofler said. Staff can use Quickbooks and even mobile phones.
“It also allows us to integrate in the cloud between Prime Revenue and Ariba,” Mr. Hofler added. “From the customer’s perspective, it’s a seamless transaction. All the information that is needed goes back and forth during the integration. The user doesn’t see it.”
Mr. Hofler has left SAP Ariba since the interview.