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in terms of discounts and payment times. It’s a per invoice system too, rather than a blanket agreement, and can be turned on and off. So there is fl exibility on both sides. And because of that, and the ease of setting it up, I think it appeals much more to smaller suppliers and so can help on the penetration issue.
On the retailer’s side, they get visibility of their supplier base: who is regularly wanting to accelerate terms, for example. So that can be very useful for them. These sorts of systems are already widely established in the US. It’s another example, in a sense, of how we are a little behind the curve in the UK relative to our counterparts across the Atlantic.
BEN
What trends are you seeing at the moment in terms of retailer-supplier relationships?
Many retailers have been under pressure and are working off ever-thinner margins and so there has been an onus on suppliers to improve their quality and just-in-time delivery. It’s still a tough marketplace. But I think retailers appreciate that their suppliers are very different and so blanket terms simply don’t work. A meat producer works on a much shorter cycle obviously than, say, a clothing manufacturer, and so payment terms will also naturally be different. Some retailers have been extending terms recently, especially on goods not for resale (GNFR). This is largely because they know they have to focus on the goods that their customers actually buy, to bring them better value and better pricing. And we should remember that in some parts of the world – Southern Europe, for example such as Italy and Spain – payment terms of 90, or even 120 days are not uncommon. In a tough market, offering fl exible invoice fi nancing can be an important way of working with your suppliers.
BEN
FOCUS 17
Tim Armstrong Digital and Analytics, Director T: +44 (0) 20 7694 8181 E:
tim.armstrong@
kpmg.co.uk
Tim joined KPMG in January of this year. He focuses on using digital solutions to help clients improve their profi tability whilst supporting their supply chains. Tim is leading the fi rm’s alliance with C2FO, a US technology platform that is used by companies such as Amazon, CostCo, Macy’s and Toys R Us. Previously, Tim worked at the Department for Business where he invested government money in tech companies such as Funding Circle and MarketInvoice and was part of the team that set up the British Business Bank.
Ben Tatham Cash Management & Turnaround Services, Director T: +44 (0) 20 7694 3801 E:
ben.tatham@kpmg.co.uk
Ben joined KPMG in 1999 and is a Director in KPMG’s Turnaround and Cash team where he specialises in driving operational effi ciency and working capital improvements. Ben is experienced at leading large and complex assignments advising boards and management teams of international clients.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
SUPPLIER FINANCE
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