Best practice: Smart combination of several supply chain finance solutions delivers maximum flexibility

The best practice example of the German full-service logistics provider Duvenbeck shows how tailored supply chain financing can improve liquidity and supplier relationships at the same time. Together with cflox, the Hamburg-based payment service provider specializing in working capital solutions, the Duvenbeck Group has supplemented its classic reverse factoring with an efficient solution that works without any lengthy supplier onboarding - and creates a real win-win situation for everyone. Sebastian Kupka, Director of Supply Chain Finance at RBI, which is on board as a refinancing partner, asked Christian Spieker, Head of Group Treasury at Duvenbeck, and Michael Niedrich, Senior Sales & Partner Manager at cflox, how modern working capital management works in practice.

Sebastian Kupka (RBI): Mr. Spieker, working capital management is currently a very present topic in treasury forums. In your opinion, what contributes to the increased exploration and implementation of solutions for optimizing working capital by companies?

Christian Spieker (Duvenbeck): The current disruptions in supply chains and geopolitical uncertainties pose significant challenges for many companies, including Duvenbeck. In the transport sector, the tense price situation means that quick payment is often very important for our subcontractors. In the assembly sector, on the other hand, we often work with suppliers who are predetermined by our end customers and rarely accept flexible payment terms. We also continuously monitor key financial figures such as net debt, EBITDA and free cash flow. We control this with our working capital solutions, among other things.

Sebastian Kupka (RBI): You have been offering solutions for active working capital management for many years. What are the general starting points and what trends do you currently see on the market?

Michael Niedrich (cflox): A key starting point in working capital management is the extension of credit periods with suppliers. Many companies are under pressure to optimize their liquidity and credit periods, but at the same time want to maintain their supplier relationships. An evident contradiction.

Thus, the trend is for companies to increasingly look for solutions that do not involve their suppliers in the process from the start. The demand for financing models that function independently of suppliers is growing steadily.

Sebastian Kupka (RBI): Mr Spieker, you have already dealt intensively with working capital optimization at Duvenbeck and with the topic of supply chain finance. In your opinion, what are the most important criteria when it comes to selecting the “right” supply chain finance solution?

Christian Spieker (Duvenbeck): For us, the initial choice was primarily about integrating all suppliers into a supply chain finance program to achieve the greatest possible benefit. To this end, we implemented a reverse factoring structure via a portal solution that allowed suppliers to determine the timing and scope of the financing themselves.

However, we found that particularly large suppliers did not want to participate. We therefore opted for a supplementary model that did not require supplier involvement.

The most important selection criteria for the most suitable solution here were high flexibility and independence from suppliers, simple implementation and operability as well as high security standards from a trustworthy provider.

Sebastian Kupka (RBI): Mr. Niedrich, what other issues do you at cflox see as deciding factors for companies?

Michael Niedrich (cflox): In addition to the selection criteria mentioned by Mr. Spieker, the improvement of the balance sheet structure or cash flow also play central roles in the market. In concrete terms, this means that a simple cash flow calculation and a forecast with uniform payment targets are sought or that the focus is on balance sheet structure management to control leverage. It is crucial here that the solution chosen by the company continues to be reflected in the balance sheet as an operating liability.

We are also seeing an increasing number of customers looking for good solutions for their suppliers. This is becoming increasingly relevant not only against the backdrop of the current sustainability debate, but also when it comes to strengthening suppliers in their own supply chain through early payment. Combining this with the targeted use of discounts creates a win-win situation for both parties.

Sebastian Kupka (RBI): What are the biggest challenges in terms of implementing a supply chain finance solution? Are there any reservations?

Christian Spieker (Duvenbeck): One of the biggest hurdles is supplier acceptance and commitment. Large suppliers in particular are often difficult to convince, as they usually have their own stable sources of financing and are less interested in additional options. A supplier-independent solution is important here.

Another critical point is the technical integration of the solution into existing IT systems. This often requires extensive adjustments to internal processes and systems to ensure a smooth process. The supplier onboarding process must be well structured and efficient to avoid delays and increase acceptance.

Internally, there are often reservations regarding the control and management of credit periods. The introduction of a new financing structure can cause resistance, as it entails changes to established processes and responsibilities.

Sebastian Kupka (RBI): Mr. Niedrich, your solution cflox pay is currently very well received on the market. How does the product differ from the many alternatives?

Michael Niedrich (cflox): A major advantage is that no supplier involvement is required. Companies can optimize their credit periods independently of the supplier by granting an additional credit period as part of a payment service via cflox and not having to negotiate individually with the suppliers.

Another decisive difference is the simple implementation. No complex IT integration is required, as only a new payment account needs to be set up. The appeal here is that suppliers continue to receive the money on behalf of the customer. This allows the solution to be used quickly and easily so that companies can reap the benefits immediately.

We are the leading provider in this area with over 80 active programs - this shows the high level of acceptance of cflox as a payment service provider among customers, banks and even auditors.

Sebastian Kupka (RBI): Mr. Spieker, Duvenbeck is a customer of RBI and the cflox pay product is well known to you. What convinced you? Can you confirm the advantages mentioned by Michael Niedrich?

Christian Spieker (Duvenbeck): We can definitely confirm the advantages. What particularly convinced us is the fact that cflox pay does not involve our suppliers in the process. This significantly reduces the administrative workload and allows us to flexibly manage credit periods without having to rely on supplier approval.

Another decisive factor was the ease of implementation. As no complex IT integration is required and only a new payment account needs to be set up, we were able to integrate cflox pay into our existing processes quickly and without any major technical adjustments.

Sebastian Kupka (RBI): cflox works with several financing partners, and RBI has been involved from the very beginning. What added value does the cooperation with RBI bring as a refinancing partner and what goals are you pursuing with RBI in the future?

Michael Niedrich (cflox): RBI has been a reliable refinancing partner since the beginning and has always supported us with its strong financial stability and deep ties to customers. A key advantage of this partnership is RBI's high flexibility and extensive network. RBI's regional expertise helps us to understand and optimally serve different market requirements.

In the current internationalization of our business model, we see RBI as a strong partner for serving the markets in Central and Eastern Europe. This makes it easier for us to access Central and Eastern European companies in order to efficiently optimize the working capital of our joint customers.

Sebastian Kupka (RBI): Are there any topics in the area of supply chain finance that you are keeping a critical eye on?

Christian Spieker (Duvenbeck): Yes, there are several current things that we are keeping a close eye on at Duvenbeck. One issue is the European Commission's Late Payment Directive, which aims to limit payment delays to 30 days. Thanks to cflox pay, however, we are well prepared for short and strict payment terms, even if the regulation is introduced (which is unlikely at the moment).

Sebastian Kupka (RBI): Digitalization and automation are becoming increasingly important in treasury. As a FinTech, cflox is spearheading this trend, so to speak. What potential do you see against the backdrop of digital innovations in supply chain finance?

Michael Niedrich (cflox): The automation of processes is a key aspect. This allows us to significantly increase our efficiency, reduce errors and improve the speed of processing.

With cflox pay, supply chain finance is now as simple as a payment run. This provides the basis for automation and digitalization. By combining the two with digital technologies such as predictive analytics or artificial intelligence, technologies will be able to automatically decide whether payment runs should be carried out with or without a working capital effect. This will optimize the financial structure and relevant key figures of companies in the best possible and fully digital way.

Sebastian Kupka (RBI): Thank you very much for the interview and we at RBI are looking forward to further joint projects.