Last week, MODIFI partnered with industry leaders to discuss supply chain challenges, and deep dived on approaches that could be adopted to help businesses stay afloat in the age of disruptions.
Unforeseen disruptions and delays in supply chains have been the way of the world in recent years. Crises - be it virus, or human induced, continue to create bottlenecks in the supply chain due to material shortages, limited transport capacities, and even payment defaults.
Small and medium-sized companies are particularly hard hit by this.
"These challenges are here to stay. The only way forward is to futureproof your business." said Serkan Basin, Managing Director of NSB Polymers, a global plastics trading company and a client of MODIFI. Inflation surges coupled with delays and shortages have led to significant and dramatic cost increases. As a result, most businesses are backed into a corner with no contingency plan to fall back upon. The only clear respite? Access to liquidity.
Cash is King
Businesses must have access to a steady cash-flow all year round. And, in the face of the unforeseen, the conventional norm is to watch, wait and lie low. During our webinar last week, we touched upon three critical approaches that can help businesses play safe yet stay ahead of all disruptions.
Switch to Efficiency
Managing cash flow on excel sheets, logging in and out of accounts and systems are a thing of the past. Opt for intelligent liquidity management solutions that make you more efficient. Not only do these streamline processes, but also provide easy and fast access to data - on your fingertips and in seconds. Cloud-based software enables you to set up automated processes via API interfaces with all banks, credit cards, CRM, ERP giving you a daily and holistic overview of your cash flow, in real time. Tools such as integrated intelligent forecasting, best and worst case scenario modelling empowers you to stay dynamic and gives you the flexibility to react to global disruptions significantly better.
Purchase Financing is credible and flexible
Karin Otten, a banking economist at ok! bankcommunication + consulting, also recommends having at least two banks on board, at all times. This provides more security, more flexibility and less dependence on just one bank. She acknowledges that it can often take a very long time for banks to conduct credit checks, and to approve loans as well. In today's world, businesses might not have the room to wait that long. In such cases, purchase financing through fintechs is the best way forward.
Know your options
"There are a bevy of non-bank financing options that can bridge liquidity bottlenecks and help businesses benefit from deferred and flexible payment terms. Consider alternatives especially when demand is high, and you need quick solutions to remain competitive. As a perk, you also get to improve supplier relations as supplier payment targets are met directly and instantly by your financier." said Sean Lamont Johnson, MODIFI Sales Director, Germany.
Expand your network
"Strong purchasing power and liquidity control is an irreplaceable armor for every buyer. Expand your supplier network so that you are not dependent on one supplier alone. Open up new sales markets if possible, and add more suppliers - perhaps from other countries. This will secure your supply chain, and allow you to fall back on alternatives in case of emergency. Also, account for new purchasing rules that may be rolled out by suppliers. Due to acute shortages, delivery problems and price increases, payment security is the top priority for most suppliers, which is why advance payments are often desired and necessary." Some insider tips shared by Serkan Basin, Managing Director of NSB Polymers, who has been working in the international plastics trade for over 12 years.
Do you need support with your supply chain planning and would like more information on topics such as liquidity management or purchase financing? We will be happy to talk to you personally and answer your questions directly at: email@example.com