Mastercard unlocks working capital with its offer

In an effort to help businesses access new sources of capital, Mastercard today (October 21) launched a new B2B supply chain finance offering as part of its Track Business Payment Service. Mastercard’s senior vice president of business and B2B solutions, David Trecker, told Karen Webster that the program is not just about providing access to capital, but to do so at a price that makes sense to vendors. Mastercard has partnered with Demica, one of the world’s largest working capital fintech companies.

Starting in North America (US and Canada) and expanding into the next year, the program will allow vendors to take advantage of reverse factoring, approved debt financing and similar programs and benefit from ” improved access to advance payments at competitive prices, one-time registration and standard agreements. .

In addition to filling the working capital gap for vendors without any access to vendor finance tools, Trecker said the solution would help those with access to get better prices when discount rates are based solely on the credit standing of the supplier and not the willingness to pay of the buyer. .

“[In traditional settings] the buyer doesn’t have working capital and the suppliers don’t get the financing and nobody is happy, ”he said.

Join the Mastercard Track network

Trecker said the supply chain finance function is an opportunity to attract new players to Mastercard’s Track BPS while serving those who have already signed up.

Read more: Mastercard deploys Track commercial payment service in the United States

He sees the initial demand coming from a variety of players – ranging from a consumer goods company with 50,000 suppliers that has only integrated “a few hundred” suppliers with its supply chain finance program. existing to freight and logistics players for whom current supply chain friction only underscores the need for better and more immediate sources of working capital.

With the new offer, Mastercard hopes providers will be paid sooner than what is currently the norm, using a single model governed by rules. Suppliers will be able to set parameters around which invoices – when and for what amount – they may want to expedite payments.

“Whether they get paid sooner, it’s a lifeline or dry powder, vendors should have a choice to decide the value of that at any time – and choose to ‘turn on and off the faucet, ”Trecker said.

Part of the value of Track BPS, he said, is being part of a network that standardizes how information is shared and how risks are assessed. With this information, it would be easy to determine who to fund, when funding is available, at what cost, and by whom.

Access to this data will lead to better results and more innovation in supplier financing, especially by starting financing earlier. This is what the industry needs and “absolutely” where Mastercard would like to go.

“[To meet] the needs of a supplier whose cash conversion cycle begins long before an approved invoice, ”he explained.

Consolidation is the key

Today’s launch follows a test that Trecker says revealed some interesting takeaways. The days of selling supply chain finance or virtual cards on a stand-alone basis “are increasingly behind us,” Trecker said, adding that industries are “intertwined” and all have the same constraints, boiling down to acceptance. The separate networks available to banks for cards and SCF must be brought together to minimize inefficiency and the resulting “higher costs”.

Information consolidation is what will produce results, he said, adding, “Let’s stop having small closed-loop networks, [and] small islands of data. If you can actually pull it all together, there are things you can do that you just can’t do today.



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About Donnie R. Losey

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