SUPPLY CHAIN SOLUTIONS
With the globalization of supply to low cost countries and the pressure to deliver products more quickly to consumers, driving costs and inefficiencies out of the supply chain is increasingly important to remain competitive. In addition to cost reductions, increasingly companies are looking for solutions to improve their working capital management whether accelerating their cash collection and reducing Days Sales Outstanding or extending their payment terms to suppliers to improve their Days Payable Outstanding.
An integrated supply chain solution reduces the total cost in the supply chain, rather than shifting costs from once trading partner to another. Often supply chain decisions are made without due consideration to the impact on the costs in financial supply chain. As an example, a change in payment terms from Letters of Credit to Open Account may reduce per transaction fees, but may create difficulties in obtaining trade finance. Similarly, an extension of payment terms may generate cash flow and favorable DPO for a buyer, but could result in causing a supplier with a higher cost of capital to carry the cost of finance. In either case, shifting the burden of finance to the party with the higher cost of capital can undermine overall cost savings.
Wachovia provides an integrated set of Supply Chain Finance options through its leading, web-based TradeXchange platform. The solution enables Supply Chain Finance options that reduce overall supply chain costs by leveraging the financial strength of trading partners in order to provide flexible, lower-cost trade finance.
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