How Adding Liquidity Unsnarls Supply Chains
What would 10 incremental days of outstanding payables do for your balance sheet and liquidity – without having to fund it yourself?
As global supply chains broke over the last few years, that question became paramount for businesses of all sizes, but especially for those on the long tail of multinational supply chains. As larger enterprises have stretched their order-to-cash cycles from a few weeks (30-45 days) to months (120-240 days), smaller suppliers have struggled to keep sufficient cash flow to simultaneously fund material purchases, operations and payroll.
The Tompkins Ventures network includes a Partner that injects liquidity throughout supply chains by making deals banks cannot touch. Core activities like sales orders, purchase orders, logistics shipments and payment transactions become assets that unlock financial liquidity for the enterprise balance sheet by unlocking liquidity for suppliers and distributors.
This cloud-based global trade platform functions like a credit card that allows larger companies to use preferred smaller suppliers without softening their terms or taking a hit on their balance sheets. The trade financing network’s compliance is built in, guaranteeing that all participants and activities in the transactions have been properly documented, authenticated and thoroughly vetted. ESG and sustainable development reporting can match any sustainability framework.
Smaller SMEs can close orders immediately, access previously undreamed-of capital to finance more and quicker deals, access surety bonding, cargo insurance and credit insurance, and utilize their own digital workspace for data governance, sharing only necessary data with other enterprises in the ecosystem.
Larger enterprises can maintain extended days payable outstanding without adversely affecting preferred suppliers, increasing liquidity without relying on their cash flow.
Notable success stories include a commercial laundry equipment supplier/installer that scaled up to handle bigger deals. Formerly limited to projects less than $100,000 in value, this supplier now routinely secures contracts worth $2 million-plus. Similarly, a SME that specializes in importing and distributing pharmaceutical products, medical technologies and medical consumables like rapid diagnostic tests grew 177% in one year. Another medical diagnostics supplier transitioned from local deals to projects involving international nongovernmental organizations.
Experienced executives know your enterprise is only as good as your supply chain, which can include hundreds or thousands of partners. If you run a large enterprise, you would do well to pay attention to unsnarling the long tail of your supply chain. If you’re a smaller supplier, we have solutions for your lengthy order-to-cash cycles.
Either way, Tompkins Ventures would be happy to help.