1. getting paid much earlier

2. getting paid much earlier
Contents
Understanding SCF
Reverse Factoring
Towards an integrated platform
Alternative Business Models
getting paid much earlier

3. Supply Chain Finance optimizes cash flow throughout value chains
SCF is about managing Cash flows
SCF stands for a set of solutions that:
.. provides Early Payment to suppliers
.. lengthens Payment Terms for buyers
.. minimizes risk throughout chains
Supply Chain Finance optimizes cash flow throughout value chains
getting paid much earlier

4. getting paid much earlier
Optimizing Cash Flow
procurement
T10
T30
T60
T60
T30
T10
sales
STRESS EP LP EP LP
SUPPLIERS NEED EARLY PAYMENT / BUYERS WANT LATE PAYMENT
getting paid much earlier

5. turning unpaid invoices into cash
Invoice Discounting vs Factoring
turning unpaid invoices into cash
Reverse Factoring
Invoice Discounting
Factoring
the lender assumes control of payment collection from your customers.
DIFFERENCES IN “RECOURSE” “LEGAL TITLE” “COLLECTION”
many variations exist .. it is sometimes hard to distinguish between the two concepts
getting paid much earlier

6. Africa accounts for 1% of the global market
A global $2 trillion dollar market
FACTORS CHAIN INTERNATIONAL
Africa accounts for 1% of the global market
getting paid much earlier

7. USD 2.3 trillion per year / mostly domestic
getting paid much earlier

8. getting paid much earlier
… growing very fast
Growing 10%+ per year
getting paid much earlier

9. getting paid much earlier
Departure Point
Distributor
Farmers
INV
$50
/30
INV
$100
/30
$50 / DAY 30
Buyer
Seller
$100 / DAY 30
EARLY PAYMENT vs LATE PAYMENT
suppliers require
EARLY PAYMENT
distributors require
LATE PAYMENT
getting paid much earlier

10. Distributor Financing EARLY PAYMENT SOLUTION
Supply Chain Finance means different products
Supplier
Distributor
INV
$50
/30
INV
$100
/30
Buyer / Seller
$47 / DAY 2
$50 / DAY 30
$53 / DAY 60
$97 / DAY 2
$100/ DAY 30
$103/ DAY 60
Supplier Financing
Buyer Financing
Seller Financing
Distributor Financing
EARLY PAYMENT SOLUTION
LATE PAYMENT SOLUTION
FACTORING SOLUTION
LATE PAYMENT SOLUTION
getting paid much earlier

11. getting paid much earlier
In this presentation we focus on Suppliers
BUYER
INV
$50
/30
SUPPLIERS
$50 / DAY 60
getting paid much earlier

12. getting paid much earlier
Suppliers … payment on T2 or on T60 ?
BUYER
INV
$50
/30
SUPPLIERS
BUT HOW ?
$50 / DAY 30 T2
payment
T60
$48
(re)payment
$50 $2
interest
getting paid much earlier

13. labour intensive process
The problem with Invoice Discounting
Relationship Bank will only discount invoices for established (SME) clients
Verification Bank will need to assess status + standing of each BUYER
Confirmation Bank will need to confirm authenticity of each invoice
Value Bank will focus on larger tickets (in view of laborious process)
Margin Bank will maintain a buffer margin and only advance 60-80%
Recourse Bank will retain recourse on SUPPLIER (in case BUYER reneges)
Buyer A
Buyer B ?
labour intensive process
fraud sensitive
supplier
SME Banking client
getting paid much earlier

14. getting paid much earlier
Another way
Reverse Factoring started in the 80’s when the automotive industry (Fiat) used it as a financing tool for its suppliers;
Spain, lead by Banco Santander, was the market where they picked up the concept (they call it “confirming”) quickly. Today, the confirming market makes up for 5,3% of the GDP of Spain;
About ten years ago, electronic platforms were introduced in order to role out reverse factoring on a large scale;
Nowadays, every major bank offers reverse factoring and it is part of a broader Supply Chain Finance program;
Supply Chain Finance is not just ‘another’ product …. it is totally focused Business Line
getting paid much earlier

15. Corporate Banking client fraud significantly reduced
Reverse Factoring = Buyer driven
Relationship Bank will take BUYER relationship as starting point
Verification BUYER pre-approves invoices … verification no longer necessary
Confirmation BUYER allows Bank to make early payment on selected invoices
Value Bank works off SCF platform allowing large volumes + small tickets
Margin Bank will pay 100% of invoice to SUPPLIER (-/- discounted interest)
Recourse Bank will not retain recourse on SUPPLIER (but insure the exposure)
Buyer
Corporate Banking client
automated STP process
fraud significantly reduced
Supplier A
Supplier B
Supplier C
getting paid much earlier

16. getting paid much earlier
Same Product  Different Risk
Both models are similar in the sense that they:
deal with a commercial relationship between Buyer and Seller;
provide EARLY PAYMENT to suppliers of goods or services.
Invoice Discounting
Reverse Factoring
Seller-centric model;
One supplier > many buyers;
Risk is on supplier;
This is often a smaller SME;
Existing SME credit relationship;
Lack of control re ‘performance’;
Invoice discounted at margin.
Buyer-centric model;
One buyer > many suppliers
Risk is on buyer;
This is often a Corporate client;
Existing CORP relationship;
Performance always confirmed;
Invoice discounted at face value.
getting paid much earlier

17. getting paid much earlier
Advantage Supplier
Perspective
Quick & Easy funding (on-demand) 
Get 100% funding of invoice
Control
Lower Financial costs
Unsecured borrowing
Cash Flow transparency
Alternative source of liquidity
No Investments
Automated, paperless solution
Free up
working capital
and improved
Financial position
getting paid much earlier

18. getting paid much earlier
Advantage Buyer
Perspective
Improve relationship with Suppliers 
Improve Commercial Terms (discounts)
Competitive advantage
Cash Flow Predictability (Buyer Finance)
Reduce risk in the Supply Chain (loyalty)
Automated, paperless solution (costs)
Control
Sometimes: revenue share ! (cash)
Reduced Risk
in the
Supply Chain
getting paid much earlier

19. getting paid much earlier
Advantage Bank
Perspective
Eliminate laborious verification issues 
Better Control & Less Work (Fraud)
Automated, paperless solution (Costs)
Cross Sell Opportunities (SMEs)
Strengthen Business Relationships
Utilization Credit Limits (Corp)
Turn-around-Time
Expand client base (SMEs or Farmers)
One Buyer
relationship
delivers hundreds
of new customers
getting paid much earlier

20. getting paid much earlier
Alternative Business Models
getting paid much earlier

21. getting paid much earlier
Bank Considerations
What is needed for a successful SCF roll-out
A world-class scalable technology platform
An effective Business Model
A sensible product / risk strategy
A targeted marketing / sales strategy
1st line help-desk support (for Buyers and Suppliers)
2nd and 3rd line business and technical support (for Bank)
An onboarding methodology (for Suppliers & Buyers)
Training … and more training
getting paid much earlier

22. getting paid much earlier
Model 1: buy the IT solution
What is needed for a successful SCF roll-out
A world-class scalable technology platform
An effective Business Model
A sensible product / risk strategy
A targeted marketing/sales strategy
1st line help-desk support (for Buyers and Suppliers)
2nd and 3rd line business and technical support (for Bank)
An onboarding methodology (for Suppliers & Buyers)
Training … and more training
getting paid much earlier

23. getting paid much earlier
Model 2: go for a PaaS solution
What is needed for a successful SCF roll-out
A world-class scalable technology platform
An effective Business Model
A sensible product / risk strategy
A targeted marketing/sales strategy
1st line help-desk support (for Buyers and Suppliers)
2nd and 3rd line business and technical support (for Buyers, Suppliers)
An onboarding methodology (for Suppliers & Buyers)
Training … and more training
getting paid much earlier

24. getting paid much earlier
Model 3: go for a SaaS solution
What is needed for a successful SCF roll-out
A world-class scalable technology platform
An effective Business Model
A sensible product / risk strategy
A targeted marketing/sales strategy
1st line help-desk support (for Buyers and Suppliers)
2nd and 3rd line business and technical support (for Bank)
An onboarding methodology (for Suppliers & Buyers)
Training … and more training
getting paid much earlier

25. getting paid much earlier
Model 4: SCF partnering approach
What is needed for a successful SCF roll-out
A world-class scalable technology platform
An effective Business Model
A sensible product / risk strategy
A targeted marketing/sales strategy
1st line help-desk support (for Buyers and Suppliers)
2nd and 3rd line business and technical support (for Bank)
An onboarding methodology (for Suppliers & Buyers)
Training … and more training
getting paid much earlier

26. getting paid much earlier
Model 5: Our Prediction ….
Within 5 – 10 years
Totally accepted financing method
Multi-bank Trading Platforms (auction structure ?)
Non-bank financial providers
If you want to see the future, look at …
getting paid much earlier

27. getting paid much earlier
Tying it all together
getting paid much earlier

28. getting paid much earlier
8 reasons to roll-out a SCF platform …
REASON
EXPLANATION 1
DRIVE REVENUE GROWTH
1 BUYER gives access to 10s/100s of SUPPLIERS
Compete against banks who do NOT deploy a system
Reverse Factoring = SME CORP risk 2
SCALE
Large volume/ Small ticket transactions can only be executed on a dedicated and automated platform
Enormous expansion of potential prospect market 3
OPERATIONAL COST
Straight Through Processing (STP) reduces human intervention (especially with volumes going up)
System is priced on SAAS basis : no write-offs 4
TAT
TAT reduced to “guaranteed next day payment”
If anything, this positively contributes to client retention (loyalty factor)
getting paid much earlier

29. getting paid much earlier
8 reasons to roll-out a SCF platform …
REASON
EXPLANATION 5
RISK
A structured programme approach offers excellent opportunities to mitigate risk through credit portfolio insurance (on both sides of the chain). 6
FRAUD
BUYER uploading approved invoices eliminates a very laborious (and costly) verification process
Maker/Checker methodology applied throughout 7
INFORMATION
Capturing transactions on both ends of the Supply Chain gives a true and holistic picture of client performance 8
CONTROL
Bringing all product limits and sub-limits together for BUYERS + associated SELLERS gives an unparalleled sense of control
getting paid much earlier

30. getting paid (much earlier
Conclusion: it’s all about predictability
“ … our biggest problem is the uncertainty, the timing of Cash Flows ..
.. If we can somehow lock in predictability, we’d be happy to pay a reasonable price for that …”
CEO
Comcraft Group
March 2015
getting paid (much earlier