Indian retail and apparel giant Aditya Birla has onboarded more than 500 suppliers to an early payment programme it launched at the start of the Coronavirus pandemic.
Rahul Desai, SVP Treasury, said the use of a two-page early payment agreement, coupled with the ability of DBS bank to extract KYC data directly from the company’s SAP system, had cut onboarding time to three days.
Desai was speaking at the latest SCF Community webinar on the topic of SCF Onboarding. His remarks came after insights into how SME suppliers react to SCF offers by Christiaan de Goeij of Windesheim University and the first sight of a comprehensive research project into SCF by Prof. Dr David Wuttke of TUM School of Management.
For de Goeij, the strength of the relationship between buyer and supplier was often more important than the financial offer in determining whether an SME supplier would join an SCF programme.
Wuttke had seen similar trends, dividing the drivers for adoption into ‘efficiency drivers’ such as access to finance and cost reduction, and ‘ legitimacy drivers’ such as how widespread SCF adoption is in the supplier’s industry.
It was clear that onboarding has been a major stumbling block for successful SCF implementations. In a live poll, 55% of those attending the webinar said onboarding was a ‘significant barrier to entry’ for supplier finance programmes, with another 41% saying it ‘could be better’.
Divyesh Dalal of DBS Bank explained that the increased use of APIs to extract information from varying systems was a key part of speeding up onboarding, in one case allowing over 100 suppliers to be onboarded instantly through one file upload in a single day without manual intervention.
The key points in the bak’s new digital approach to SCF onboarding were:
• Plugging Directly into the anchor buyer’s ERP
• Accessing suppliers details through APIs
• Sending supplier onboarding notifications through a reverse API feed
• Using APIs for transaction initiation (limit inquiry, financing request and repayment status)
The recorded webinar is available to view here.
The next SCF Community webinar looks at new ways to finance SMEs which may not pass traditional credit checks. It takes place on Thursday, July 16th 2020 at 10:00 AM (CEST) Registration is free of charge here.