Four Ways to Balance Liquidity and Supplier Health

Summary

Find out how treasury managers, risk officers, directors, and supply chain managers can use SAP Taulia to protect liquidity while building a resilient, mutually beneficial supply chain.

This blog offers practical advice on automating strategies across treasury, procurement, risk, and operations to ensure a true win-win for everyone involved.

Using SAP Taulia, organizations can safeguard cash reserves while ensuring all their vendors remain financially healthy and supported.

Contents:

Design an automated hybrid funding workflow

Build a dynamic supplier segmentation matrix

Build tools to deepen understanding support planning

Bolster supplier communication

For treasury, risk, and sustainability teams, supply chain management is a daily balancing act. Naturally, companies need to protect their own cash reserves. But they also need to make sure their vendors have access to liquidity.

A successful program relies on a “win-win” approach. If an arrangement is heavily one-sided, it will only last until an alternative appears and potentially cause friction down the road. True benefits must exist for both the buyer and the seller.

This step-by-step guide explains how companies can use SAP Taulia to automate cash flows, better understand their supply chain, and build relationships based on open, honest communication.

1. Design an automated hybrid funding workflow

Traditional supply chain finance (SCF) programs are notoriously manual. But with a sophisticated self-service solution, you can automate key processes, optimize your daily working capital without drowning in admin work, and scale up easily.

It is important to recognize that suppliers opt into early payment models for a variety of strategic reasons. For instance, even large, cash-rich corporations with over $1 billion in sales frequently choose to use discounting. Motives as to why differ greatly from organization to organization. This can include building stronger partnerships with the buyer, driving efficiency in handling invoices, automating reconciliation, and securing attractive pricing to accelerate cash against their internal cost of funding.

For buyers, the motivation to offer early payments varies based on their current strategic and cash flow needs. A flexible funding model allows you to seamlessly switch between funding sources to meet these changing requirements:

• Dynamic Discounting to automatically use your excess cash to pay suppliers early and create treasury return benefits.
• SCF enables third-party funding and access to SAP Taulia’s network of over 40+ funders.

By standardizing your cash preservation process and automating early payment offers, you can create a system that helps meet internal targets. This is achieved by applying baseline payment terms directly within your SAP ERP and allowing the platform to autonomously present transparent, early payment options upon invoice approval, eliminating manual negotiations. It can also be tailored to seamlessly support the diversity in your supply chain and the different needs of your suppliers.

2. Build a dynamic supplier segmentation matrix

Companies often want to tailor their payment terms and financial support to fit different segments of their supply chain. To do this effectively, you first need to map your supply chain and segment your vendor database.

However, it is crucial to remember that every supplier is vital to your success, regardless of their segment. While some suppliers provide custom-manufactured components, others provide everyday materials like standard packaging. But make no mistake: if the end product doesn’t have the correct box for shipment, sales processes can grind to a halt.

With SAP Taulia, you can set up specific sets of rules tailored to the operational realities of different suppliers. This lets you tailor your program with the right mix of early payment and dynamic discounting rules. It fits the diverse business models in your supply chain and creates a win-win for everyone.

3. Build analytical tools to better understand supply chain management and support buyer/supplier planning

Data and information flow are incredibly valuable, but they must be interpreted correctly and managed sensitively.

Predictive analytics and data collection should be used to gain a deeper understanding of your supply chain and better support your partners. For example, a supplier might suddenly start accelerating 100% of their invoices for early payment. This doesn’t automatically indicate financial distress,but could be a result of suppliers meeting their owntreasury management targets

By using SAP Taulia Suite Analytics, you can build analytical tools that help you understand these trends. Instead of monitoring suppliers from a negative point of view, you can proactively collaborate with them to support their planning and offer the right financial flexibility when they choose to use it.

4. Bolster supplier communication to build better relationships and understanding

To position yourself as a customer of choice, you need to keep suppliers informed, and good data encourages open, dynamic discussion with your partners.

Operational best practice is encouraged in this way and can be combined with rolling demand forecasts. This shared forecasting helps suppliers in their planning and alignment with you.

Alongside this operational predictability driven by your ERP, you can offer your suppliers financial flexibility options via SAP Taulia.

Operational summary checklist by function

✔ Treasury: Connect SAP Taulia to your ERP and set up automated SCF/Dynamic Discounting funding rules.

✔ Procurement: Segment the vendor database into strategic and transactional buckets and apply tiered payment terms.

✔ Risk: Configure SAP Taulia dashboard alerts to track sudden spikes in early payment requests from suppliers.

✔ Operations: Establish a process to share ERP demand forecasts regularly with key suppliers.