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SMEs Can Add Liquidity, Seek Bigger Projects
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 all businesses. But the query was especially critical for those on the long tail of multinational supply chains. Because larger enterprises stretched their order-to-cash cycles from a few weeks (30-45 days) to months (120-240 days). Such moves forced smaller suppliers to struggle to keep sufficient cash flow to simultaneously fund material purchases, operations and payroll.
Innovative Financing Solutions for Supply Chains
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. Then, those assets 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. This unlocks previously undreamed-of capital to finance more and quicker deals, access surety bonding, cargo insurance and credit insurance. The SMEs can use their own digital workspace for data governance, sharing only necessary data with other enterprises.
Larger enterprises can maintain extended days payable outstanding without adversely affecting preferred suppliers. The entire supply chain adds liquidity without relying on their cash flow.
Make Big Deals Easier by Unchaining Capacity Constraints
Notable success stories include a commercial laundry equipment supplier and 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.
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Jim Tompkins, Chairman of Tompkins Ventures, is an international authority on designing and implementing end-to-end supply chains. Over five decades, he has designed countless industrial facilities and supply chain solutions, enhancing the growth of numerous companies. He previously built Tompkins International from a backyard startup into an international consulting and implementation firm. Jim earned his B.S., M.S. and Ph.D. in Industrial Engineering from Purdue University.