Pro Quidity, a financial service provider based in Amsterdam, will be launching supply chain financing this autumn for large Dutch corporates and their small to medium-sized suppliers. The focus on a broad spectrum of suppliers makes Pro Quidity’s offering different from most traditional supplier finance programmes that cater largely to a select group of large-scale strategic suppliers.
According to Jaap Remijn, Pro Quidity’s CEO, corporates stand to benefit a great deal from offering this broad-based group of SME suppliers access to an alternative source of working capital financing. Furthermore, the Dutch government is recognising the economic value of dedicated supply chain finance for the SME sector as a result of a recent study.
Until now supplier finance has been reserved for a limited group of large-scale suppliers. Why is that?
As the graph on the left shows, the small and medium-sized suppliers of an average corporate are accountable for a significant share of their annual purchasing volume. Since this relates to so many suppliers, they don’t fall within the scope of other supplier finance programmes due to the high onboarding costs involved. It’s practically impossible for a bank to provide hundreds of suppliers with access to financing programmes because of all the regulations governing new clients. This is very different for us at Pro Quidity. We have built an online platform specifically targeting a large number of users – with tight turnaround times for onboarding and offering a high level of user-friendliness. This means quick results for the corporates in terms of adding sustainable value to their supply chain by granting access to liquidity for their suppliers.
The Dutch Ministry of Economic Affairs recently commissioned a study into supply chain finance to improve liquidity in the SME sector. What were the key findings of this study?
The study concluded that there is great long-term potential for supply chain financing for this sector in the Netherlands. But it also concluded that the SME sector has little if any access to supply chain finance, since programmes are mostly targeted at a limited group of large-scale suppliers. Minister Kamp of Economic Affairs wrote to the Dutch House of Representatives in April, outlining that initiatives are currently being investigated to ensure that parties develop broad-based supply chain finance programmes that could be used by several large-scale buying companies. In the meantime, Pro Quidity has been awarded a subsidy from the Ministry via TKI for the development of the online supply chain finance platform.
What is the opinion of CFO’s and treasurers of large corporates on supply chain finance for SME suppliers?
CFOs and treasurers are always focused on optimising their working capital. However, they also attach a great deal of importance to adding sustainable value to their supply chain as part of their Corporate Social Responsibility (CSR)-agenda. Our online supplier finance programme offers new opportunities specifically in this arena. This is because utilising our programme can create a win/win situation enabling both buyers and suppliers to strengthen their working capital position and for buyers to meet their CSR-objectives.
But we have also met with procurement officers recognising the added value of our programme in their strategic supplier management, and with accounts payable managers who perceive opportunities to boost efficiency within their departments. It’s precisely the small and medium-sized suppliers who regularly call about the status of their invoices – and that’s plenty of phone calls on a daily basis. This won’t be necessary if Pro Quidity is engaged, because thousands of suppliers will be able to see online - 24/7 - which of their invoices have been approved.
Won’t supplier financing for more than a thousand of their suppliers cost too much time and money for a corporate? Will the benefits outweigh the costs?
Pro Quidity offers corporates a turn-key online supply chain finance programme. We arrange a certified connection between our platform and the ERP system operated by the large corporate. We also take care of onboarding all the suppliers. The corporate enjoys the benefits of supplier financing at a minimal cost and effort. Our business model hinges on converting invoices into cash. We cooperate closely with various banks for funding. As a result, the Dutch SME supplier gains access to liquidity for an acceptable fee.
Will Pro Quidity’s programme also be accessible for corporates operating outside of the Netherlands?
In the forthcoming months, we will first concentrate on the programme’s roll out for corporates and their suppliers operating within the Netherlands. After this, we will embark on a further European rollout. The next countries in line for expansion include Germany, Belgium and France.
About the author:
After holding various positions within ABN AMRO’s Transaction Banking Business, Jaap Remijn was appointed COO & CFO of the Hollandsche Bank Unie (HBU) in 2005. Following its takeover by Deutsche Bank in 2010, he became Country COO for Deutsche Bank in the Netherlands. In 2013, he decided to start his own company. Together with Willem-Jeroen Stevens, he founded Pro Quidity. Remijn takes care of managing day-to-day affairs related to the new multibank supplier finance programme for SME suppliers.
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