Payables Finance

Increased lending restrictions and compliance regulations are putting a strain on companies in Asia Pacific. To respond to this restricted cash flow, many companies are seeking to increase their DPO while lowering their DSO through traditional methods:

  • Buyers look to pay their suppliers on extended payment terms
  • Suppliers aim to speed up payment from their existing customers

Both practices create a win-lose situation, however, where a company gains at the expense of its supply chain partners, leading to strained relationships and disruption within the supply chain


Through co-operation in the financial supply chain, the buyer can create a mutually beneficial solution:

  • Buyer provides assistance to suppliers to lower their finance cost
  • Suppliers in return agree to an extended payment term (but still receive cash at time of invoice approval)

 

The structure of this financial solution is key to maximizing benefits for both buyer and supplier:

  • Use of third party funding to enable this financial solution, so no use of the buyer’s cash reserves
  • Considered a “true sale” of the receivable and no debt allocated to either party

Convergence’s Payables Finance program is what you need to create this win-win solution

Buyer provides an invoice guarantee to the seller, which give’s seller access to cheaper financing options.  Buyer only provides the payment guarantee after they have negotiated a shared benefit with the supplier, usually in the form of extended payment terms.

  • Buyer can pay at extended maturity depending on negotiation with suppliers
  • Seller can request early payment from funder at a lowered cost