Over two-thirds of companies report they are either investigating or implementing Supply Chain Finance (SCF) programs to lower end-to-end costs, according to a study from The Aberdeen Group.
In a study of 110 firms, the Best in Class buyers had 13.6 days greater day payables outstanding (DPOs) on average and have trade financing at an annualized rate that is 2.86 percentage points lower than their peers, thanks to implementation of an end-to-end SCF system. Companies are also taking advantage of new technology platforms, which assist in SCF initiatives. New programs go beyond electronic invoice presentment and payment (EIPP) and are utilized from sales executives to CFO’s at both large and small companies. The study warns, however, against a cost-shift from buyers who do not have sophisticated SCF practices. Many buyers are extending payment terms for their suppliers, resulting in a less stable supply base and eventually higher costs. The Aberdeen Group recommends the following three areas of improvement: SCF Financing, SCF Technology and SCF Visibility. By adopting SCF technologies and financing techniques, Best in Class sellers have been able to improve customer retention and grow sales while improving their access to capital.To read the entire study, click here.