Early payment eases supply-chain finance
Increased awareness by corporates of the role played by small suppliers in maintaining strategic supply chains has boosted the availability of early payment programmes.
In the current inflationary and rates environment, corporates are prioritizing the health of their supply-chain partners that are facing a perfect storm of substantial increases in raw-material prices, tightening liquidity conditions and rising borrowing costs – all of which make cash-flow management a notable challenge.
A supplier survey published by Taulia earlier this year found that 38% of respondents were taking early payments in 2021 – double the number that were taking them in 2017 when the company started the annual survey.
Early payment is viewed as a highly effective tool by an increasing number of our larger corporate clients to support suppliers without impacting their own cash flow
“Early payment is viewed as a highly effective tool by an increasing number of our larger corporate clients to support suppliers without impacting their own cash flow,” says Frederick Rugginz, EMEA head of supply-chain finance programme management, trade and working capital at JPMorgan.
While supply-chain finance is often combined with payment term amendments, JPMorgan has seen a surge in enquiries from clients looking to offer early payment without even opening negotiations with their suppliers.