Global Supply Chain Finance Ltd. (GSCF) is pleased to assist IT Distributors in EMEA with the structuring of working capital financing aimed at increasing their payment terms with Hewlett Packard (HP).
GSCF enables, together with its partner Banks and Insurance Companies, the extension of terms to Distributors via an innovative structure called “Hybrid Receivables Financing” which is based on confirmed Payables from selected Distributors and in relation to their trades with a Vendor. The key advantage is that the Vendor does not sell its Receivables to a Financial Institution based on the terms of a Receivables Purchase Agreement, but it is the Distributor that individually enters into a Trade Finance obligation with the GSCF program Funder. Although the Vendor is not a direct party to these programs, it strongly benefits from this innovative solution which can be implemented more quickly than a program based on the sale of Receivables.
The main benefits for the different stakeholders are summarized below:
For the Distributor:
- Extend payment terms towards the Vendor when required
- Keep part of the early payment cash discount on offer
- Increase Days Payables Outstanding (DPO)
- No impact in leverage (this financing is not treated as Bank Debt)
- Obtain additional borrowing capacity as existing credit lines do not have to be utilized for working capital financing
- Gain administrational efficiencies over the trading activity with the Vendor
For the Vendor:
- Reduction in Days Sales Outstanding (DSO) with no in-time payment uncertainty
- No credit risk associated with the Distributor once payment is received from Funder
- Possibility of increasing sales based on the Distributors ́ improved cash situation
- Improve competitive advantage versus other IT Vendors with less attractive payment terms offered to Distributors.
To learn more about GSCF Group, please contact us.