Japan ยท Electronics manufacturing
A component supplier to a large electronics manufacturer wanted faster payment without asking its main customer to change standard ninety day terms.
The customer accounted for a large share of the supplier's revenue and set its payment terms across its entire vendor base, so an individual request for early payment was unlikely to succeed.
The supplier's own growth plans needed the cash tied up in that receivable released sooner than the standard cycle allowed.
We identified that the customer already ran an approved supply chain finance programme with its principal bank, and arranged for the supplier to be onboarded into that existing programme.
This meant the customer's payment terms did not change at all. The supplier simply sold its approved invoices to the programme funder at a small discount, in exchange for payment within days rather than ninety.
The supplier began drawing early payment on invoices worth up to JPY 500m at any one time, funded through the customer's existing programme.
Cash conversion improved sharply without any renegotiation of commercial terms, and the customer relationship was unaffected since the change was invisible to its own payment process.
Details are anonymised. Figures are rounded and identifying information is removed or altered to protect client confidentiality. Past transactions are not a guarantee of future outcomes.
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