Turning the Supply Chain Tables

Dynamic Customer Finance

Everyone loves a bit of creative collaboration – especially when it helps support supply chains throughout a global pandemic. This is the story behind Borealis’ innovative idea to turn supplier finance on its head, with the support of C2FO. Together, the two companies have created a dynamic customer financing solution that strengthens buyer relationships by accelerating, or extending, timelines for outstanding receivables. This innovation was the hands-down winner of the TMI 2020 Corporate Recognition Award for Best Supply Chain Solution.

The timing for releasing a brand-new solution for supporting buyers to dynamically extend payment terms could not have been more well-orchestrated. Just as Covid-19 was starting to wreak devasting negative impacts on people and businesses, across the globe, Austrian-headquartered chemicals company Borealis was rolling out its innovative dynamic customer finance (DCF) solution, developed in partnership with C2FO.

Nevertheless, the innovation had been incubating pre-pandemic, as Jan-Martin Nufer, Borealis’ Vice President Treasury & Funding, explains. “We had been using C2FO’s dynamic supplier finance capabilities for some time – and were very satisfied with the benefits. Leveraging this success, I was keen to explore a solution that would work in a similar way for customers.”

With this concept in mind, Nufer approached C2FO to collaborate on a solution that enables treasury to occasionally offer longer payment terms to carefully selected customers – with a revenue benefit for Borealis.

Push and pull

With DCF, it is also possible to accelerate receivables through various funding options, including early payment by customers. As Colin Sharp SVP, EMEA, C2FO, explains: “Our dynamic model gives you full control over which invoices are included, their funding methods, and at what price.”

One of the other benefits, says Nufer, is that DCF “does not have to be a permanent arrangement – it can be offered as required”. In short, treasurers can dynamically adjust the timeline of outstanding receivables, on demand. This enables them to help maintain and improve buyer relationships, which is an even more critical task during Covid-19.

Sharp notes: “The ability to offer payment terms tactically and dynamically to both customers and suppliers in the supply chain, treating them like an ecosystem rather than a linear progression, is an important part of our strategy.”

Innovation for all

While DCF started out as a solution for Borealis, it has now evolved into an innovation that can bring benefits to a host of companies across global supply chains. The TMI awards judges were impressed by the ingenuity of this solution, as well as the close collaboration between C2FO and Borealis to turn an idea into reality.

The ability to help supply chain partners in a new manner is more than deserving of TMI’s 2020 Corporate Recognition Award for Best Supply Chain Solution – and becomes even more impressive in the context of the Covid-19 pandemic. Nufer comments: “Particularly now in crisis time, companies are resorting solely to the traditional ways of prolonging payables and shortening collections. Businesses are in a situation now where all the years of sitting on ample excess cash might come to an end. They should be thinking that now is the time to consider also using more external finance for the welfare of their supply chain.”

Sharp concludes: “I’m proud that, by collaborating with Borealis, C2FO has been able to step in and help to ease the pain for clients, and their supply chain partners. We congratulate Jan-Martin on this Award win and look forward to working closely with him and our other clients throughout 2021.”