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Implementing a Supply Chain Financing Programme

by Fabrice Legoux, Director, Operational Finance, Liberty Global

ING and Liberty GlobalAt Liberty Global, we pride ourselves on being an innovator in our use of technology, and the quality of customer service that we offer. This commitment to innovation and efficiency is apparent across the whole business, which includes treasury and finance. Consequently, two years ago, we started to increase our focus on trade and working capital management to improve our financial efficiency and increase the resilience of our supply chain. One of the most significant outcomes of this was to implement an innovative and highly successful supply chain finance programme with ING.

Options for working capital improvement

As a business operating largely in the B2C space with a large proportion of direct debit receivables, we recognised that we had limited opportunity to optimise collections further to enhance our working capital position. Instead, we could achieve the most significant improvements by extending supplier payment terms, particularly for suppliers of large capital items. One option was to negotiate new payment terms directly with each supplier, but this would have taken time and potentially jeopardised our relationship, in direct contrast with our objective to improve the resilience of our supply chain. The other, preferred option, was to introduce new standard payment terms across our organisation, but to launch a supply chain finance (SCF) programme concurrently, in order to avoid any negative impact on our key suppliers.

Partnering for success

We appointed ING as our partner bank for two of our three SCF programmes for a variety of reasons. ING is one of our core banks, which was an initial requirement, and we have had a long, successful relationship during which we have been impressed by their knowledge of our business and of the wider industry. The ING team has been consistent in listening to our needs and responding with robust, innovative solutions that meet our requirements. Working with ING, we identified a number of key objectives for the SCF programme:

Firstly, we wanted to achieve working capital benefits by substantially extending payment terms up to 360 days;