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FinShare Overview      |      Bank Payment Obligation (BPO)      |      Supplier Finance (Reverse Factoring)      |      Receivables Finance      |     
 
Purchase Order Financing      |      Factoring      |      Asset Based Lending (ABL)      |      Risk Participation      |      Document Preparation (DocPrep)
 

 
PAYABLES MANAGEMENT AND FINANCING (PMF)

Industry Terminology used in Payables Management & Financing: 
  •     Supplier Financing
  •     Payables Financing
  •      Reverse Factoring (Same as Supplier Financing)
  •     Negative Financing (Same as Supplier Financing)

 

Premium's FinShare Payables Management and Financing Solution is a multi-purpose Buyer centric application and provides banks and financial institutions with the ability to offer buyers/importers the means to service and manage the processes in-and-around Accounts Payables. This solution manages payables related to cash flow and working capital in order to minimize the costs of funds and maximize available cash.

Our Payables Management and Financing Solution is a tool that replaces or augments the Accounts Payables processing of the bank's clients by acting as an intermediary or service provider.  Click here to find out how our Payables Management and Financing System can lower a buyer's DPO.


Scenario A
  • The bank or Buyer negotiates with the suppliers/exporters for an early pay discount that the bank would fund for the buyer before the scheduled terms and conditions (T&C) payment date.

  • The pre-pay would generate an interim discounted loan to be paid-off on the original scheduled T&C payment date

  • On the original scheduled T&C payment date, the bank would debit the buyer's account for the full amount and close the associated interim loan.  The bank would keep the discount

  • Depending on the service agreement with the buyer, the bank may share the payment discounts with them.

Scenario B
  • If there are no supplier/exporter discounts, an automatic invoice payment would be effected based on the buyer's payment schedule and instructions.

  • Accordingly, the bank debits the buyer's account on the payables' due date.

  • This service would generate fees for the bank

Scenario C
  • Another approach would have the buyer financing the payables due beyond the original scheduled T&C payment date by changing the tenor date or through an inventory collateralized loan - extended payables financing. This would provide the buyer access to working capital that would have otherwise been unavailable.

  • The Bank would charge interest on this loan.
  FinShare Suite Illustration
 
 
FinShare Suite Illustration  

Payables Management and Finance (PMF)

The Payables Management and Finance (PMF) solution is built on the same integrated core system platform from the FinShare Product Suite, which are (1) commercial loan module (2) risk management module(3) web-enabled collaboration/negotiation

The PMF also has a separate module called the Invoice Manager which processes and schedules payables for payment or financing prior to the original scheduled T&C payment date. The Invoice Manager enables the application to validate, approve, discount, reject and manage the workflow process of payables transactions; capture seller/vendor information; and establish payment rules and instructions in the program. The functionality of the Invoice Manager is based on the workflow set-up for each buyer/supplier relationship

The Invoice Manager Module:

  •   Establishes invoice validation rules
  •   Establishes invoice payment schedules
  •   Sets-up payment instructions
  •   Tracks buyer/seller financial transaction data relationships
 
 
The Three Components of PMF:
  •   Payables processing and payments scheduling.  This component manages approved payables and schedules the associated payments according to the due date terms and conditions.  This provides the basics for cash management, and forecasting working capital

  •   Payables processing for early payment trade discounts or special payment terms.  This component processes approved payables based on pre-negotiated terms for early payment discounts between the buyer and seller.  This is similar to 2/10 net30 or can handle an aggregated volume discounts/rebates
 
  •   Payables financing is based on the creditworthiness of the buyer.  This PMF component provides supplier financing for approved payables based on buyer/seller pre-arranged terms with the bank for discount financing.  Supplier finance in the PMF can be either automatic discounting for all approved payables for the buyer/seller relationship or it can be a manual selection process of approved payables by a seller (Reverse Factoring) through the web enabled portal.  The PMF Supplier Finance accelerates payment to suppliers and builds supplier loyalty by giving them access to cheaper funding, it also gives the buyers more leverage with supplier relationships.  The payables supplier financing is process through the FinSharecore system platform and risk management controls. As an extension to the financing continuum, the PMF has the functionality for the bank to provide payables financing beyond the payment due date to accommodate the cash flow needs of the buyer.  This process can be an automatic set-up for a buyer/seller relationship or on a payment cycle basis
 
 
The Payables Financing Module:
  •     Allows for uploading and/or entering of payables/invoices online
  •     Allows for web based access, so that clients can easily access and track invoice/payables status (paid, pending, scheduled, reports, etc.)
  •     Allows for the processing of amendments to payables (invoices) such as credit notes
  •     Allows multiple levels of validation, review, authorization, and controls
  •     Allows unlimited fee schedules: fixed, tiered, indexed, multiple
  •     Allows automatic invoice payments based on the buyer's payment schedule
  •     Allows automated settlement and release functions
 
  •     Allows banks to batch invoices/payables by seller to negotiate discounts for pre-payment before the scheduled payment date
  •     Allows banks to pre-pay sellers and receive the negotiated discounts
  •     Allows the associated batch of invoices/payables to be treated as an asset for creating an interim loan (loan for the pre-payment amount plus fees and/or mark-up prior to the original scheduled payment date).  At the original scheduled payment date, the bank debits the buyer's account for the full payment amount and closes out the loan
  •     Provides financial reporting and G/L entries for the bank's and the buyer's systems
 
 
PMF Benefits
  •   Similar to the Receivables Management & Financing System Operational benefits
  •   Full utilization of the FinShare Core System functionalities (Loan, Risk Management, and Web enabled collaboration and negotiation)
  •   Automated uploads of payables (approved for payment invoices)
  •   Processes buyer/seller early payment discount terms (2/10 Net 30)
  •   Automated discounting invoices for supplier finance based on buyer creditworthiness and bank financing arrangement
  •   Web based supplier selection of invoices for discount financing ( Reverse Factoring) based on buyer creditworthiness and bank financing arrangement
  •   Automated debiting of customer accounts per payment scheduler
  •   Unlimited fees capabilities for both buyer and seller transaction processes
 
  •   Streamlines buyer's accounts payables operational process
  •   Reduces costs, errors, omissions, and manual processes
  •   Sets-up payment instructions
  •   Perform payables financing scenario analysis for asset and loan creation through its' invoice selection and batching functionality
  •   Provide client access for input, query, and correspondence services
  •   Utilize multi-level system security, transaction processing validation, authorization, and review capability
  •   Utilize audit trails and management reporting
  •   Economize and utilize scalability and flexibility in transaction volume
 
 
Highlights
 
The FinShare product suite includes a robust set of modules and components for Payables Financing which enables:
  •     Straight-through-processing (STP) to reduce costs, errors, omissions, and fragmented manual processes.
  •     Solution(s) functionality allowing for new product offerings such as payables management and payables financing.
  •     Collaboration and negotiations with clients through a web-based portal for uploading payables files (invoices and invoice validation rules), client information, vendor information, payment terms and conditions, and correspondence.
  •     Ability to support all types of fees, tiered charges, discounts, and multi-currency payables transactions.
 
  •     The use of a rules-based engine to solve common exceptions and escalate exceptions during the payables transaction processing lifecycle.
  •     Detailed information access and reporting, such as, multi-level reporting and monitoring, on-line dashboards and analytics, daily activity and settlement reports, etc.
  •     Highly scalable and flexible since it is not limited by transaction volume or payables type. PMF can be a standalone, multi-user, multi-entity, or multi-site
 
 
Value Added Services
 
Premium Technology offers the marketplace leading edge FinShare Financial Supply Chain Solutions (FSC) utilizing the latest information technology such as J2EE/Java/XML.
 
The FSC product suite is a robust set of modules and components that allows financial supply chain constituents to participate in the working capital value proposition (sellers, buyers, banks, financial intermediaries, corporate, etc.)
 
The value proposition is to maximize availability and optimize utilization of working capital with minimal costs and manage associated risks.
 

 
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