July 16th, 2014

What SupplierPay Means for Your Business

And How to Get Ahead

Your Presenters

Joe serves as Chief Strategy Officer for Taulia, leading market intelligence and working capital strategies. Joe is responsible for the company’s global commercial planning efforts and provides in-depth analysis on current and future market developments, product performance and SaaS software markets. Joe holds a Bachelor’s Degree from Dartmouth College, studying Business and Economics.

Joe Hyland

Lex is the co-founder of Greensill Capital, as well as a Crown Representative and Senior Advisor of Her Majesty’s Government. Previously, Lex was Managing Director and Head of Supply Chain Finance for Europe, Middle East & Africa at Citibank, and also established and led Morgan Stanley’s Supply Chain Finance business globally. He is also a Solicitor of the Supreme Court of England and Wales and of the Supreme Court of Queensland.

Lex Greensill

Current Market Challenges that

led to SupplierPay

The Situation

Large organizations have over $2.5 trillion in idle excess cash

Large Corporates

Small businesses are in need of cash and have little to no access to capital – the #1 challenge for small businesses

Small Businesses

Better Use of Excess Cash

Even with the excess cash, large corporates are taking longer and longer to pay their small business suppliers – on average 55.8 days

There are 28 million small businesses in the United States

They outnumber large corporates 1162 to 1

Small businesses produce about half of private nonfarm GDP

Over 50% of the working population (120 million) works in a small business

Current Payables Cycle Doesn’t Make Sense

Supplier sends customer an invoice

with net 60 terms

01 Supplier Invoices

Customer

Large businesses using automation

software, can approve invoices within days

02 Customer Approves

Invoice on Day 5

Even though invoices are approved earlier,

buyers hold on paying until 60 days

03 Customers Wait

Until Due Date to Pay

Suppliers, strapped for cash, have to resort to outside financing to gain

capital during this 60-day period

04 Suppliers Have to

Seek Financing

What Has Been Done to Solve It

•  Prime Minister met with some of the largest companies in the UK who agreed to support their supply chains by implementing Supply Chain Finance (SCF)

•  Asked corporates to use SCF to help supply chain access credit and improve cash-flow at a much lower cost

•  The Government will also offer this to its own suppliers

The Connection to UK Supply Chain Finance Scheme

The Connection to QuickPay

Supplier Pay is modeled after QuickPay, which requires

federal agencies to speed up payments to small business

contractors - with goal of paying within 15 days

QuickPay

QuickPay has expedited more than $220 billion in

payments to federal contractors and saved small

businesses more than $1 billion since 2011

Results

As part of the SupplierPay initiative, QuickPay has also

been renewed for federal small business subcontractors

Renewal

•  Partnership launched July 11th, 2014 with private sector to strengthen small businesses

•  Initiative asks large corporations to pay their suppliers early to increase cash flow through the supply chain

•  The President brought together 26 companies that have committed to supporting their supply chain by pledging to pay suppliers early

What is the SupplierPay Initiative?

SupplierPay Objectives

What is the Goal of SupplierPay?

The goal is to close the gap between invoice approval and

payment to help small businesses avoid borrowing money

and access more capital to invest in new opportunities, new

equipment and new hiring

Program Objectives:

0 DAYS invoice

5-10 DAYS approval

60 DAYS due date

Mitigating the Risks of SupplierPay

The White House recognizes there are impacts of implementing an early payment program to comply with SupplierPay that have to be mitigated in order to create a win-win for buyers and suppliers.

Corporate Concerns

Shrinking DPO

Loss of Cash Reserves

Unfavorable Interest Rates

Only Target Large Suppliers

There are solutions in the market that solve these challenges by offering buyers the choice to pay their suppliers early using their own excess liquidity or the liquidity of a third-party financial institution. This allows for: Maintaining of DPO Maintaining of excess cash Flexible and favorable interest rates, much lower than alternative financing Ability to offer early payments to entire supply chain

The SupplierPay Pledge

SupplierPay Pledge

•  The key to job creation, which fuels growth, lies within the health of small business. They make up half of GDP and most of the jobs created in the US

•  Access to capital, working capital included, has and continues to constrain their growth

•  Large organizations can help through early payments, meaningfully contributing to growth and employment

•  This is a win-win as large organizations can earn a strong return while providing the liquidity that small businesses desparately need

Overview

SupplierPay Pledge

Provide a Working Capital Solution to Our Small Business Suppliers and take active steps to lower the working capital cost of small business suppliers through:

01: Find a Working Capital Solution

Paying suppliers faster than we do today to reduce their capital

needs

Enabling a financing solution that helps small suppliers access

working capital at a lower cost

OR…

Helps small business, but you need to optimize invoice processing

By definition, reduces DPO and thus your own working capital

Implement a financing solution and capture discounts in return for providing cash more quickly

If cash is not available, use third-party funding

Use combination of both of these to maximize return on cash and provide competitive financing

Ridgid ”all or nothing” approach lacks flexibility and elegance

The White House wants progress to be publicized – opportunity for positive PR and Corporate Social Responsibility efforts More around the initiative is coming, in terms of additional White House meetings and forums to share learnings

SupplierPay Pledge

Strengthen supply chains and support small firms with the goal of driving impactful follow-up action from the broader marketplace. To encourage support, we’ll highlight tangible outcomes for our own efforts, providing visibility into our actions and publicize key learnings in implementing this pledge

02: Share Best Practices

SupplierPay Pledge

We will implement this pledge in a manner that ensures our small suppliers are able to take advantage of our commitment while minimizing new administrative or operational burdens. We will define ”small supplier” and if we choose to offer these solutions to the entire supply chain, we will continue to focus our efforts on the small suppliers that will benefit most. We will not use our pledge to offer financing as a means of extending payment terms with our current small business supplier base.

03: Implement a Win-Win

Need to create your own definition of ”small supplier” Initiative specifcally focuses on a solution for small suppliers – ensure solution is able to implement them

Small Suppliers

Extending terms can be used for those not defined as ”small supplier”

Extended Terms

Challenge with Helping Small Suppliers

30-50 LARGEST

SUPPLIERS

Large SUPPLIER SIZE Small

Typical Supplier Spend Curve

Alternative Financing

Interest Rate

Traditional SCF

Segment that SupplierPay Addresses

Creating the Win-Win

Initiative Alignment & Creating the Win-Win

In a nutshell, Dynamic Early Settlement is the offering of early payment discounts on approved invoices awaiting payment. This offers suppliers discounts calculated on a sliding scale based on the number of days suppliers choose to be paid early

With Early Settlement

Supplier Benefits

•  Allows suppliers to get paid sooner

•  Suppliers opt-in – allowing them to choose when and what the discount is

•  Provides better balance sheet

•  Discount rates dramatically lower than alternative financing

20 Days 40 Days 60 Days

Early Pay Quick Start Initiative

A successful early payment financing

program up and running within 100 days

Speedy Deployment Assurance that 100% of

invoices will be offered for early payment – with

flexibility of using your

own cash or 3rd party funding

Every Invoice All suppliers will be

eligible for early payments, regardless of

size, spend or credit

worthiness

Every Supplier

QUESTIONS?