Tuesday, 3 March 2015

Supply chain financing ... very few banks but a lot of buttons

Tuesday 3rd March 2015

Ariba is the biggest player in the e-invoicing market. According to its 17 February 2015 press release:
More than 1.7 million companies, including two-thirds of those on the 2014 Forbes Global 2000 list, are connected to Ariba Network. And a new company is added every 13 minutes. In 2014 alone, 200,000 selling organizations joined the network, where more than $700 billion in commerce is transacted on an annual basis.
Ariba is also tapping into the invoice discounting market. It's partnering with buyers to pay suppliers early. Supplier gets cash early. Buyer gets a better return than sight deposits. Ariba gets a cut. 
Ariba Discount Management and Dynamic Discounting offering
Source: www.ariba.com
It would seem that from $700 billion in invoice value, Ariba saw $10 billion of invoices discounted in one year; or 1.4%. 

From that $10 billion, Ariba's customers captured $150 million in discounts. This is not an insignificant sum but totals 1.5% of total discounted invoice value. That 1.5% looks like it went to the capital providers, i.e. the buyers. 

As the broker/platform/service provider, I reckon Ariba probably receives a lesser cut than the underlying capital provider. Most likely something in the order of 0.25% to 0.5%. Twenty five to fifty basis points on $10 billion in discounted invoice value equates to $25 million to $50 million (c. £16 to £32 million). 

Or put another way, Ariba's cut from early payment services might be something like 0.003% to 0.007% of the original $700 billion in invoice value flowing over its network.

Tungsten reported £117 billion in invoice value for 2014. You do the math.

Of course Ariba are not the only players in the market having a go at this invoice discounting malarkey. 
Basware Financing Services offering
Source: www.Basware.com
Taulia Dynamic Discounting offering
Source: www.Taulia.com
Tradeshift Early Payment offering
Source: www.tradeshift.com
Nipendo Supplier Financing solution
Source: www.nipendo.com
GT Nexus Supply Chain Finance offering
Source: www.gtnexus.com
Transcepta Supply Chain Finance and Dynamic Discounting offering
Source: www.transcepta.com
TradeRocket Early Payment offering
Source: www.traderocket.net
Direct Commerce Discount Management offering
Source: www.directcommerce.com
The list goes on ...

Disclaimer: The information, discussions or topics referred to on this blog should in no way be considered “advice” to buy or sell anything. The information which may be referred to is freely available in the public domain and where required the source of information is referenced to for verification. While every effort has been made to ensure the veracity of any information contained within this blog, the author accepts no responsibility for the accuracy of any information contained within this blog or for the sources of information which may be referred to. Readers are responsible for their own actions and interpretation of the information contained within this blog.


  1. Hi Matthew

    I am glad you are beginning to see the potential. In your previous post you estimated penetration of 15% of 9% (i.e. 1.35%) and here you point out that Ariba achieved 1.4% in their first year.

    Doing the maths – 1.4% of £117bn is about £1.6bn which would leave Tungsten with an interest margin of £8-12m. Not bad if they were to achieve this in the 1st year (personally I think it might take them more than a year to get to £1.6bn in advances).

    The real question is what could we reasonably project to happen to invoice flow and penetration in Years 2, 3, 4, 5 etc.?

    Invoice flow – contracts announced since IPO including GE and Siemens give line-of sight to c£250bn in invoice flow. Tungsten’s offering is clearly attractive to buyers as these are ‘huge wins’ – there is no reason to believe they won’t win a few more MNCs/Governments as clients.

    Discounting penetration – this is more of an ‘unknown’ but if Ariba can get to 1.4% in year 1 perhaps 3-5% might be achievable in a few years, with managements aim of 10% as a bit of a stretch.

    Using £250bn of invoice flow and 4% penetration we get to £10bn of advances and about £50-75m of interest margin to Tungsten, which makes a joke of the current MCap. Even assuming 1.4% penetration as the ‘ceiling’ we still get to £20m of NIM which carries the current MCap.

    Beyond the £10bn of advances through its Network, there is an additional financing opportunity open to Tungsten - The RNS on 22 December 2014, noted

    ‘the Company now has the technological capability to offer to finance the vast majority of approved-to-pay invoices to Suppliers, not just those received electronically on the Network’’

    I have no idea how much of this additional market they will end up financing (or frankly – how it will work), but there is significant potential for upside in lending from this statement….

    Best regards


  2. The entry requirement for masters to have completed a bachelor's degree. mba in supply chain management


  3. Thanks for your marvelous posting! I seriously enjoyed reading it, you can be a great author. I will be sure to bookmark your blog and will come back in the future. third party logistics la

  4. This comment has been removed by the author.

  5. Just pure brilliance from you here. I have never expected something less than this from you and you have not disappointed me at all. I suppose you will keep the quality work going on. payday loan in waco texas

  6. Thanks for Nice and Informative Post. This article is really contains lot more information about This Topic.  penny stocks

  7. I can see that you are an expert at your field! I am launching a website soon, and your information will be very useful for me.. Thanks for all your help and wishing you all the success in your business. Compare EUR-USD Brokers

  8. I’ve been surfing online more than three hours today, yet I never found any interesting article like yours. It’s pretty worth enough for me. In my opinion, if all webmasters and bloggers made good content as you did, the web will be a lot more useful than ever before. pasaport harcı anlaşmalı bankalar

  9. A supply chain is a business procedure that joins makers, retailers, clients and providers as a chain to, create and convey items as a solitary virtual association of pooled abilities and assets.logistics certification

  10. I will talk about two elective business financing items. Rather than the customary business credit, they are anything but difficult to acquire, can be set up in days, and they develop as your business develops. run your home business from anywhere

  11. I propose merely very good along with reputable data, consequently visualize it: https://rogerchainsaw.com/

  12. I read this article. I think You put a great deal of exertion to make this article. I like your work. https://statystyka.online

  13. We offer the best stock alert service with swing trade alerts, day trade alerts, and penny stock alerts Stock Picking Service

  14. Thanks for sharing this excellent informations about Supply Chain Management ! Keep blogging!!!

    Accounts Payable Outsourcing
    Accounts Receivable Outsourcing
    Supply Chain Control Tower

  15. This is really nice to read content of this blog. A is very extensive and vast knowledgeable platform has been given by this blog. I really appreciate this blog to has such kind of educational knowledge.
    Arabic translation in London

  16. This should be possible on most sites by utilizing their inward internet searcher, which will look through just their website pages. blog comment service

  17. I found this blog after a long time which is really helpful to let understand different approaches. I am going to adopt these new point to my career and thankful for this help.
    UK notarization

  18. Yes i am totally agreed with this article and i just want say that this article is very nice and very informative article.I will make sure to be reading your blog more. You made a good point but I can't help but wonder, what about the other side? !!!!!!Thanks how to choose a brokerage account

  19. This comment has been removed by the author.

  20. This comment has been removed by the author.

  21. Auto bitcoin bot Celeste Barber is an actor, standup comedian, and TV presenter known for her role in the famous Australian TV series, All Saints. She is estimated to be worth nearly half a billion dollars. There are rumours that Celeste Barber has invested in several bitcoin robots to grow her wealth.

  22. The sector is big. According to CB Insights, there are "41 VC-backed fintech unicorns worth a mixed $154.1 B." One driving element is that lots of conventional financial institutions are supporters and also adopters of the technology, actively investing in, partnering or obtaining with fintech start-ups since it is simpler to offer digitally-minded customers what they want, while additionally relocating the industry onward and also staying pertinent. Bruc Bond endeavor to lead the financial sector with sustainability, customizable product offering, and open communication. At Bruc Bond we aim to make 21st century banking straightforward, simple, and transparent.

  23. You rock particularly for the high caliber and results-arranged offer assistance. I won't reconsider to embrace your blog entry to anyone who needs and needs bolster about this region.
    CRM with Invoicing


  24. Great post, but you can also checkout this blog about Blockchain Technology

  25. Opening an account is simple but it can be tedious. money blog

  26. This post is so informative and makes a piece of very nice information on the topic in my mind. It is the first time I visit your blog, but I was extremely impressed. Keep posting. For more visit here online supply chain management company

  27. Good to become visiting your weblog again, it has been months for me. Nicely this article that i've been waited for so long. I will need this post to total my assignment in the college, and it has exact same topic together with your write-up. Thanks, good share. Cryptocurrency

  28. A borrower can utilize the private cash advance for a wide range of purposes. The individual in question may renegotiate a current home loan, buy more property, or build enhancements for business land caveat loan

  29. Great blog.you put Good stuff.All the topics were explained briefly.so quickly understand for me.I am waiting for your next fantastic blog.Thanks for sharing.Any coures related details learn...
    Blockchain technology

  30. Hi to every single one, it’s truly a good for me to visit this web page, I love your content, they are very nice and it includes helpful Information. Check out our website supplier management for more **** related info! I am truly pleased to read this website posts which carries lots of helpful data, thanks for providing these kinds of statistics.

  31. Get huge discount on Home and Kitchen Appliances,Split and Window Air Conditioner, Mobiles & Laptops online , Television, Speakers & more electronics at best price.
    kelvinator hitachi 1.5 ton 5 star split ac

  32. Wow, What an Outstanding post. I found this too much informatics. It is what I was seeking for. I would like to recommend you that please keep sharing such type of info.If possible, Thanks. trucking service

  33. It is a great website.. The Design looks very good.. Keep working like that!. Analisa Saham

  34. Awesome post. This is a decent post and gives full data. I like to peruse this post because I met such a great deal of new realities concerning it really. Thanks, loads. I bookmark your weblog because I found amazing data on your weblog, Thanks for sharing
    Send Ramadan gifts to Pakistan

  35. It is really a helpful blog to find some different source to add my knowledge. Shipping From China To Amazon FBA

  36. This comment has been removed by the author.

  37. If more people that write articles really concerned themselves with writing great content like you, more readers would be interested in their writings. Thank you for caring about your content. Upstox referral link