Skip to main content
main-content

Über dieses Buch

This book presents a business model on how to structure the relationship between financial services and procurement. The need for new models is particularly important to support small and medium enterprises (SMEs) where there is an evident difficulty in accessing credit. Due to this context, innovative solutions must be introduced.

The objective of this book is to determine how innovation can support the dynamic and volatile international context and the increasingly relevant function of procurement. It is becoming more and more important to take into account complex international transactions with notably long payment terms. Organizations need to manage the best way to handle the financial relationships and the risks related to credit provision and payments. This book presents an end-to-end support to procurement, including trade finance, supply chain finance, and related payments.

In addition, the enterprises need to keep sufficient liquidity levels in the short and medium term. This is a constant challenge today, with the turbulence of financial markets and a continuing climate of economic uncertainty making it harder to obtain external funding. Businesses need to optimize the working capital. This can be done through the innovative concept of procurement finance, which allows SMEs to benefit by the new vision of collaborative procurement.

This book provides several practical examples of advanced procurement finance solutions. It demonstrates how the use of process improvement and technology can help in overcoming the current financially difficult situation. In addition, based on the business model presented, the integrated approach to procurement finance allows sustainable solutions which will be of interest to academics, researchers, managers, and practitioners in both buyer and vendor companies, as well as in banks and other financial institutions.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction to Procurement Finance

Abstract
The world is changing. The changes impact also on the organizations, which need to adapt and become more agile. Procurement is becoming more important in the organizations transforming its objectives from cost savings to value adding. Procurement is moving from the role of support to a primary contributor to the value for the customers. Procurement finance has an important role in supporting this transformation. Procurement finance is the holistic view of the relationships between procurement and finance. It includes trade finance, supply chain finance, and vendor payments. This integration and coordination go well beyond the traditional roles of the sourcing organization to be in sync with the entire organization and its strategy.
This chapter includes also a list of abbreviation and the websites of many organizations which support all the processes of procurement finance.
Bernardo Nicoletti

Chapter 2. Procurement Processes and Finance

Abstract
The basics for any improvement in procurement finance are essentially two aspects: a clear definition of its processes and the analysis of the relationships between finance and procurement. This chapter examines these two aspects. It underlines the move from the traditional supply chain with its linear nature and its limitation to inside the boundary of the organizations to the value network. This expression underlines two important aspects. The first one is the extension of the traditional supply chain outside of the organization, including the vendors, the partners, the distributors, and even the customer. The second aspect is the fact that the procurement “chain” is becoming more and more a network, in order to satisfy the request of flexibility and collaboration and to add value to the end customers. The chapter presents a model of the relationships between finance and procurement to reach the objectives of the organization.
Bernardo Nicoletti

Chapter 3. From Trade Finance to Supply Chain Finance to Procurement Finance

Abstract
Trade finance is a long-established financial product. Over time, it has been extended to the financing of the entire supply chain. A modern vision considers the entire end-to-end procurement process. It is what this book defines as procurement finance. Procurement finance includes a holistic view of trade finance and supply chain finance. It extends also to the management of the payments connected with procurement. As such, it is an essential component also of the treasury management for the organizations. Its main objective is to manage the entire process in such a way to improve the relationships with the vendors, optimize working capital and liquidity, support effective payment systems, and add value to the customers and to the organization.
Bernardo Nicoletti

Chapter 4. Agile Procurement Finance and Its KPI

Abstract
In the modern world characterized by change and volatility of the environment, it is essential to approach also procurement finance from an agility point of view. The starting point is the capability to measure the key process indicators, analyze them, develop the procurement finance, and verify the indicators against the objectives of the organization. In order to be successful, it is essential to lean the processes, digitize them, and take a modular approach, both in the system architecture and in the development of new applications. The key process indicators with which to start should be connected with the supply, the control, and the profitability. The glue among all these factors are the data. Their management and reporting is the best way to direct the agility development.
Bernardo Nicoletti

Chapter 5. New Solutions for Procurement Finance

Abstract
Digital transformation has allowed exploiting new solutions to support the increasing need for procurement finance in support of the digital transformation and the globalization. The new solutions support the full procure-to-pay process: from ordering and tendering to credit and financing, to the payment, and the support to the preparation and collection. In terms of ordering, the portals and the e-marketplace are particularly relevant. Thanks to an omnichannel approach, it is possible to access an application everywhere, with any device, anywhere, and anytime. Risk management is providing a great support to the credit and financing transactions. Great signs of progress are taking place in the field of advance payments and in particular in the foreign exchange market. Finally, the processes are more and more dematerialized and moving to the cloud. The benefits are easier access, simpler storing, and availability at all the times and everywhere.
Bernardo Nicoletti

Chapter 6. Fintech and Procurement Finance 4.0

Abstract
The future of procurement finance is connected to the digital transformation, which in the case of procurement finance is a digital revolution connected with Business 4.0. The correct concept is to consider procurement finance 4.0 as a platform, with several actors—proprietors, providers, producers, and purchasers—with interchangeable roles. Fintech organizations are and will play more and more an important role in this new vision. At the same time, the technological solution which can make all this possible is blockchain, whose characteristics are more and more appreciated around the world. The digital transformation can gain a lot also from artificial intelligence and mobility.
Bernardo Nicoletti

Chapter 7. Procurement Finance for the Small and Medium-Sized Enterprises

Abstract
Procurement finance provides many benefits in helping in the resolution of small and medium-sized enterprises (SMEs) financing, essentially connected with the difficulties in accessing to the credit from the financial institutions. First, it has more flexibility. With the aid of supply chain strength, upstream and downstream enterprises on respect to the customer business can use the flexibility of financing strategy, inherent to procurement finance, to obtain various forms of financial support. Second, procurement finance helps in getting direct financing, for instance within the same ecosystem composed of SMEs, financial institutions, and third-party logistics operators. Third, it is easy to carry our folk financing (private lending) since the supply chain provides an information sharing platform for financial institutions and SMEs. This helps in solving the problem of information asymmetry between financiers and enterprises.
This chapter develops also a model for SMEs to manage the digital transformation process and to evaluate the acceptance of the new technologies.
Bernardo Nicoletti

Chapter 8. Conclusions on Procurement Finance

Abstract
Procurement finance is one of the most dynamic function in the organization. Its future can be bright but it must be in full sync with the organization’s strategy. Its digital transformation is important due to the fact that procurement is a function lateral to the entire organization. It must become the yeast and the leverage in support to the digital transformation of the entire organization and in particular of the procurement and finance processes and relationships.
This chapter includes an extensive glossary of most of the terms relevant to procurement finance. It includes also a large bibliography and list of relevant websites. They can be used as a reference for many sectors of the organization.
Bernardo Nicoletti

Backmatter

Weitere Informationen

Premium Partner

    Bildnachweise