7 min read
Key takeaways
- HCL sought innovative ways to improve its working capital metrics and strengthen its supply chains.
- Delivered via a strategic alliance between J.P. Morgan and Taulia, this innovative solution combines the fortress balance sheet of a global bank with the ingenuity provided by a fintech to deliver powerful outcomes via a single, agile platform.
- The solution provides insights that allow HCL to extend payment terms on the basis of supplier categories and locations, maximizing the amount of working capital that can be released.
About
HCL Technologies Limited (HCL) is a global IT services and consulting company with a vast supply chain that comprises over 6,600 suppliers across more than 10 markets. The company’s products, services, and engineering prowess are built on the back of four decades of innovation, with a world-renowned management philosophy, a strong culture of invention and risk-taking, and a relentless focus on customer relationships.1
The challenge
In 2021, HCL conducted a benchmarking analysis to assess its working capital metrics and sought an innovative and out-of-the-box solution to generate greater efficiencies.
To improve its working capital, HCL desired a global supply chain program that would enable it to support its supplier ecosystem, while allowing them the harmonization of payment terms across its expansive supplier base, ensuring a healthy vendor ecosystem that allows its suppliers to access alternate and, in many cases, cheaper sources of financing.
The solution
HCL opted to go with a global Early Payment Program (EPP) – a solution provided by J.P. Morgan that leverages the bank’s strategic alliance with fintech, Taulia – to accelerate supplier payments and optimize working capital via a single, agile global payments platform.
With the solution, HCL suppliers who join the EPP can opt to be paid earlier than the contracted payment term, as suppliers can elect to receive early payments on outstanding invoices for a discount. Suppliers can also experience better rates, as they can take advantage of HCL’s outstanding credit quality to secure funding from J.P. Morgan.
For the company’s 400-largest suppliers by annual spend, the EPP will standardize payment terms based on three key supplier categories – business services, contingent labor and IT services – while payment terms for the remaining 6,200 suppliers will be standardized based on the key vendor locations of U.S. and India, and others.
3 Key Supplier categories:
1. Business services
2. IT services
3. Contingent labor
Leveraging the power of Taulia’s platform, HCL has been able to automate supplier segmentation, which allows for targeted outreach that facilitates rapid supplier onboarding in a fully digitized manner, ultimately helping to support suppliers across HCL’s vendor ecosystem, regardless of their size.
Taulia’s industry-leading technology also provides the seamless integration and exchange of data between the Taulia platform and HCL’s enterprise resource planning (ERP) system. Together with feature-rich analytics tools on both the buyer and supplier user interfaces, the technology enables invoicing activities to be fully transparent and managed automatically in real time.
“The health of our supplier ecosystem has always been a priority for us at HCL Technologies. We expect the unique Early Payment Program to deliver increased efficiencies for our vast network of 6,000-plus suppliers, while at the same time also helping us unlock a significant portion of working capital trapped within our global supply chain, to improve HCL’s own cash conversion cycles.”
Vineet Sood
Executive Vice President of Finance and Treasury at HCL Technologies Ltd.
The results
Leveraging J.P. Morgan and Taulia’s strong supplier connectivity and use of big data analytics to simulate supply chain scenarios, the EPP is expected to help HCL unlock millions of dollars in working capital annually. The power of the EPP solution also lies in the ability for HCL to switch from a supply chain financing-based program (bank-funded) to a dynamic discounting approach (corporate-funded), should HCL opt to fund its vendor ecosystem using its own surplus cash. Whilst doing so, they are ensuring their suppliers have access to the capital they need through a unique EPP, maintaining a healthy vendor ecosystem for its 6,600 global suppliers.
Delivered through an alliance between J.P. Morgan and Taulia, the solution meets HCL’s objectives for deploying a supply chain finance program, including a tailored approach for payment term standardization across suppliers, the use of automation to streamline and speed up supplier enrolment outreach and onboarding, as well as a best-in-class platform that seamlessly integrates invoicing and vendor data into HCL’s own technology systems and business processes.
The EPP will enable HCL to significantly unlock working capital trapped in its supply chains, while also providing them with the flexibility to switch from a bank-funded model to a company-funded approach, if needed.
“The Early Payment Program has been a game changer for companies like HCL as businesses increasingly prioritize supply chain resiliency, working capital optimization and digital transformation in today’s macroeconomic landscape, to deliver enhanced efficiencies not just for themselves, but also to benefit vendors across their entire supplier ecosystem.”
Rajiv Warrier
Head of India Corporate Sales for Payments at J.P. Morgan
Let's connect
icon
Loading...
References
© 2023 JPMorgan Chase & Co. Member FDIC. Deposits held in non-U.S. branches are not FDIC insured. All rights reserved.
J.P. Morgan makes no representations as to the legal, regulatory, tax, investment or accounting implications of the matters referred herein. Not all products and services are available in all geographical areas. Visit jpmorgan.com/disclosures/payments for further disclosures and disclaimers related to this content.
Related insights
Payments
How strategic alliances are reshaping supply chain finance solutions
Nov 29, 2022
Taulia hosted the Working Capital and Supply Chain Finance Lab at Eurofinance’s virtual event ‘International Treasury Management Week’ featuring a session on the Power of Partnership.
Read more
Payments
Optimizing working capital with innovative, sustainable supplier payments
Dec 08, 2021
The global pandemic placed greater demand on working capital needs across all businesses. Now treasury teams are adopting a holistic approach to supplier payment solutions to optimize supply chain management, enable new efficiencies and drive sustainability.
Read more
Payments
Honeywell frees up working capital at height of pandemic with record SCF solution
Global conglomerate stabilizes supply chain to support suppliers during COVID-19
Read more