THE SUPPLYCHAIN INTERVIEW
SEBASTIAN ANDREESCU
Sebastian Andreescu , CEO of FinTech company Billhop , discusses how paying suppliers by cards helps corporations eliminate the need for supplier onboarding
It makes little business sense to onboard a supplier that you ’ re only going to pay once
WHO IS BILLHOP ?
» We are a payment service enabling businesses to manage supplier payments by card on a global basis . Businesses can instantly pay any supplier by card , regardless of whether the supplier accepts cards . This effectively eliminates the need for supplier onboarding as suppliers do not have to be onboarded onto a corporation ’ s Enterprise Resource Planning ( ERP ) system to be paid . Billhop caters to predominantly midcapitalisation and large-capitalisation enterprise clients .
WHAT ARE THE MAIN ISSUES AROUND SUPPLIER PAYMENTS ?
» Supplier payments for enterprise clients are usually divided into direct spend and indirect spend .
Direct spend normally represents the lion ’ s share of a company ’ s spend ,
but is often concentrated around a few strategic suppliers , who tend to use this as negotiation leverage , to ensure swifter payments terms .
This can lead buyers to have low Days Payable Outstanding , which means a significant amount of working capital is tied up in inventory .
Indirect spend tends to be ad hoc and / or low-value payments spread across many suppliers .
Enterprises are required to onboard suppliers to their enterprise resource planning ( ERP ) system and follow the same procure-to-pay process as their direct spend .
This often leads to a situation where the cost of manpower spent onboarding indirect-spend suppliers to their ERP system is higher than the actual invoice they are trying to pay , as the ERP onboarding process is rigorous and time consuming .
20 December 2023