Supply chain resilience is a critical priority for businesses worldwide. Factors such as the COVID-19 pandemic brought to light vulnerabilities in traditional supply chain models, with late payments surging and small suppliers disproportionately impacted. This seismic event exposed the urgent need for companies to safeguard their operations and revenue streams against future disruptions.
According to Taulia’s Supplier Survey 2023-24, more than 50% of suppliers reported being paid late by customers, with 20% of payments arriving more than 30 days past the due date. The strain on cash flow for smaller businesses is particularly acute, as they often lack the reserves to mitigate prolonged delays in payments. Inflationary pressures and rising interest rates further exacerbate these challenges, as the cost of raw materials and financing continues to climb. For the energy and utilities sector, the stakes are especially high. While rising oil prices have generated additional capital for investment, thin margins in other segments necessitate operational efficiency.
Innovative financial solutions, such as Taulia’s Payables platform, are playing a pivotal role in bolstering supply chain resilience and unlocking untapped capital.
Unlocking trapped capital with supply chain finance
A staggering $44trn is estimated to be trapped in global supply chains, tied up in unpaid invoices and inefficient processes. Supply Chain Finance, facilitated by platforms such as Taulia’s, provides a practical solution. By offering suppliers the option of early payments in exchange for a small discount, businesses can inject liquidity into their supply chains without significantly impacting their cash positions.
Dynamic Discounting is a solution that allows buyers to use their own cash to accelerate payments to suppliers dynamically according to the supplier’s specific working capital needs. This provides cost savings and strengthens supplier relationships. For businesses seeking greater flexibility, supply chain finance enables third-party funders to offer early payments, helping to preserve vital working capital.
Sustainable Supplier Finance is a financing solution that represents a compelling evolution in this space. By tying early payment discounts to environmental, social, and governance (ESG) metrics, businesses can incentivize suppliers to adopt sustainable practices while reducing their cost of capital. For example, suppliers that meet specific ESG criteria may qualify for lower rates on early payment financing, creating a mutually beneficial dynamic.
According to further research by Taulia, more than 90% of a company’s opportunity to reduce environmental risk lies in its supply chain. Companies such as Bridgestone have implemented Sustainable Supplier Finance programs to align supplier performance with corporate ESG objectives, creating a ripple effect across its supply chains.
Supporting growth in volatile markets
Despite the challenges, many businesses remain optimistic about the future. Taulia’s survey revealed that 85% of suppliers are feeling positive about the year ahead, with nearly half prioritizing growth. Early payment programs are instrumental in supporting this ambition, with more than 50% of suppliers citing cash flow gaps as their primary reason for accessing early payments. Rising interest rates have not deterred participation in these programs, as suppliers value the predictability and flexibility they offer.
Energy companies, in particular, have embraced these tools. A major US energy firm onboarded 70% of its suppliers to Taulia’s program within nine months, a milestone that previously took 11 years under its former system. This accelerated onboarding not only fortified the supply chain but also allowed the company to break even on its investment within four months.
Taulia Payables provides step-by-step guidance to businesses for implementing these programs efficiently. Features such as supplier liquidity segmentation ensure that funding reaches the most critical parts of the supply chain. By dynamically adjusting funding based on company needs and supplier participation, businesses can maintain continuous liquidity and minimize operational risks.
Supply chain resilience is no longer the sole responsibility of large corporations. “Larger corporates are recognizing their inherent resiliency and extending that strength to their suppliers,” said Vincent Beerman, head of platform and ESG at Taulia, in a recent webinar. “By supporting smaller businesses with tools like supply chain finance, they ensure the entire ecosystem remains robust.”
This shift from a transactional to a collaborative model reflects a broader understanding of supply chain interdependencies. A single supplier failure can halt production for an entire enterprise. By prioritizing financial health across the supply chain, businesses not only mitigate risk but also enhance their ability to recover from disruptions.
Upgrading supply chain resilience
Financial solutions such as Taulia Payables, part of the Taulia Working Capital Management platform, are redefining supply chain resilience by addressing liquidity constraints and fostering collaboration. From Dynamic Discounting to Sustainable Supplier Finance, these tools unlock trapped capital, enable growth, and align financial practices with ESG goals. As businesses navigate an increasingly volatile global landscape, such innovations will be crucial in building resilient, agile, and sustainable supply chains.
Taulia’s innovative platform combines Supply Chain Finance, Dynamic Discounting, and Sustainable Supplier Finance, empowering companies to maintain operational efficiency while fostering supplier relationships. By leveraging advanced technology and a global network, Taulia delivers flexible, scalable solutions that drive financial resilience and long-term growth.
Taulia is a leading provider of working capital management solutions that enable businesses to optimize cash flow, unlock trapped liquidity, and strengthen supply chains. The company supports millions of suppliers across over 150 countries, processing more than $5trn in transactions to date.
To learn more about the solutions offered by Taulia, download the report below.
