During these extremely challenging times understanding the financial liquidity in your supply chain can bring enormous benefits to both buyers and suppliers alike. For the buyer, having the transparency of daily liquidity positions enables key decisions regarding payment terms to be addressed on a dynamic basis.
For example, buying organisations can help their SME suppliers with their cash flow challenges by either ensuring on time payment, or early payments depending on their own specific liquidity position.
For suppliers, to understand their own liquidity positions enables them to work with the buying organisations and explain their own particular position, if necessary, to reduce any friction and continuity of supply.
Having procurement and supply chain teams working more closely with their own treasury organisation can significantly improve the knowledge, transparency and modelling capability in this area……a somewhat neglected area in many buying team’s capability.
Collaboration between buyers and suppliers has never been more necessary in times of global crisis and co-operation within the financial supply chain is critical. Maybe a key outcome of this in the future is that there will be more co-operation and understanding of respective financial supply chains going forward and far more flexibility in payment terms and liquidity planning between buying and selling organisation……let’s hope so.