Original State or Problem / Client Requirements:
The client, ARP, identified a need to improve payment flexibility for vendors participating in the Supply Chain Financing (SCF) program and the Draft Program. They sought a solution to expedite vendor payments while maintaining accurate accounting and reporting.
Client Insights: ARP aimed to provide vendors with the option to receive payments earlier for improved cash flow.
Challenges and Current State of Industry:
Before the implementation of the Supply Chain Financing (SCF) and Draft Program, ARP faced several challenges in vendor payment flexibility and cash flow management, including:
- Lack of Vendor Program Visibility: ARP struggled to identify which vendors had applied for the SCF or Draft Program. This lack of visibility made it challenging to track program participation and benefits.
- Risk of Double Payments: Without a system in place to verify if a vendor had already received payments from the bank, ARP inadvertently made double payments to vendors who had already been paid through the SCF or Draft Program. This issue resulted in financial inefficiencies and reconciliation challenges
The Solution:
- Payment Term Creation: Your team created two new payment terms, AC13 for the SCF program and AC14 for the Draft program. These payment terms allowed vendors to receive payments earlier than standard terms for a small fee.
- Data Synchronization: To maintain consistency, the same data as payment term AC12 was used for AC13 and AC14. This ensured a uniform approach while offering different payment options.
- Table Creation: A new table, YTMM_SCFDRAFT, was created to facilitate the management of SCF and Draft Program transactions. Transaction code YM105 was assigned to maintain this table.
- Purchase Order Report: A new purchase order report was developed to provide a clear view of SCF and Draft Program transactions. Transaction code ZME2M was assigned to enable efficient table maintenance.
Business Impact:
- Improved Cash Flow for Vendors: Vendors now have the option to receive payments earlier, enhancing their cash flow and financial stability.
- Streamlined Accounting and Reporting: The creation of uniform payment terms and the introduction of a dedicated table and report simplified accounting and reporting processes for ARP.
- Enhanced Vendor Relationships: Offering flexibility in payment terms strengthens ARP’s vendor relationships and competitiveness.
- Efficient Program Management: The ability to maintain program-specific data and generate reports efficiently supports program management.
Business Impact Summary: The Supply Chain Financing and Draft Program implementation resulted in improved cash flow for vendors, streamlined accounting and reporting, stronger vendor relationships, and efficient program management for ARP.