Can payments innovations fix supply chains? 

In contrast, late payments damage trust and efficiency. For companies that require cash to proceed with delivery of products or services, it creates productivity bottlenecks. Longer term, it holds companies back from being able to plan and scale.  

“Digital payments are a key tool in preventing late payments. They provide two things which are often missing in the payments chain – transparency and data. A digital, trackable payments process allows suppliers to know exactly when and how they can expect to get paid,” Ian Hill, Director of Product Management – Virtual Cards at payments technology platform Taulia, says.

This certainty allows these businesses to pay their own suppliers downstream, settle taxes, produce accurate accounts, take on new orders, commit to purchases, and make plans – all critical to remaining solvent and in growth.  

Supply chain finance is another tool that can cut the risk of late payments and supply chain disruption. It does this by enabling businesses to optimise their working capital, and to bridge periods where they may be awaiting payment or facing a financial challenge. For example, this could look like a business borrowing money at a low rate to pay its suppliers earlier. It can then conserve its own cash, which can be invested at a higher rate to the loan. By deploying a solution like this, the business has made its own funds work harder, earning more interest, and has supported the cashflow of other companies in its supply chain.   

Used together, digital payments and working capital solutions offer the ability to bring other supporting financing tools into the equation. For example, a supplier to Company A might be used to net 90-day terms. By deploying a working capital solution, Company A could pay the supplier via trackable, automated digital payments on 30-day terms, increasing payee confidence, loyalty and satisfaction, while optimising their own returns.  

Another cashflow-friendly tool which combines data with digital payments technology is dynamic discounting. In this scenario, there is no borrowing. Instead, the supplier offers a discount for early settlement. Data on individual firms helps calculate the optimal discount.  

Cashflow problems cause productivity holdups, and so for Taulia, creating as much flexibility in their funding and payments solutions as possible is key. Taulia has recently brought to the market the ability to offer what it calls ‘Flexible Funding’. This gives corporate buyers the ability to choose when they want to use supply chain finance and working capital solutions, and when to use dynamic discounting, with the ability to switch quickly between the two.  

For example, a company may be flush with cash one month, and wants to pay its invoices early. Later in the year, it may want to preserve its cash and finance those invoices. Through Taulia’s combination of services and digital tools, the business can optimise its working capital and smooth over natural ebbs and flows in income over the course of the company year. 

When it comes to creating a sustainable supply chain, a key focus has always been on transportation, whether it is trying to reduce distance travelled, use cleaner fuels or switch over to electric vehicles. However, one vital area that is often overlooked is materials. 

“We keep using the same materials we have used through history. We are changing how we make the materials, we are trying to make process more green, but we are not changing the materials themselves,” says Albert Douer, Chairman and Co-CEO of sustainable plastics company UBQ.   

“Yet, every material that we need for our daily lives affects the planet negatively in some way, because at some point we have to extract it,” continues Douer.   

Think of the plastics we use in our daily lives, they mainly come from hydrocarbons, while simple building materials like concrete require extensive mining of sand and gravel. The list goes on.  

Re-thinking materials  

UBQ has a radically different approach. It takes unsorted household waste and through its own patented conversion process, breaks down the organic matter to its component parts and then uses these building blocks to create a bio-based thermoplastic.       

“Rather than extracting from the planet, we are utilizing something, that, if left alone, would actually be damaging to the planet,” says Douer.    

The material, which comes in pellet form, can be used for a wide range of applications, from packaging to automotive parts to tennis shoes. It can also be an effective substitute for wood in the construction industry, such as for roofing or pallets, meaning less trees need to be cut down.    

Disrupting waste disposal   

UBQ can also be effective at the other end of the supply chain. To take one example, the UK ships over a million tonnes of waste to continental Europe each year to be incinerated, which contributes to air pollution in the region. UBQ can disrupt this process by locating its plants close to where the waste is being produced. The thermoplastic created can then be sold or exported, bringing in extra revenue to the country. One of the problems that many sustainable materials have had is that they are not economical. But according Douer, “UBQ can compete with all of the fossil-based materials, we have taken cost out of the equation.”  

  So how can UBQ help the payments industry? “Well J.P Morgan is building a new office building in New York,” says Douer, “think how many desks they have in the space, how many garbage cans? These can all be made with UBQ!”