Category: Transport & Logistics

Winner: Highly Commended

Partner: PrimeRevenue

Summing up: An SCF programme designed to improve the shipping company’s working capital position while also being used as part of a recruitment drive to attract top-tier hauliers at a time when the industry is facing a shortage of quality sub-contractors.

What the judges said: “The entry offers good metrics as proof of the success of the SCF programme.” “Impressive set -up time.”

Key Facts:

• €6.8 million in additional free cash flow
• 61 suppliers fully registered to date
• €1.8 million in cash flow gain in less than a month.

Entry:

Danish shipping and logistics company DFDS wanted a financing solution which would improve its working capital position, increase its Days Payable Outstanding (DPO) ratio and align payment terms with industry standards.

It chose PrimeRevenue as its partner to create a new supply chain finance programme, and together they were able to create an additional €6.8 million of additional free cash flow that DFDS has been able to use to fund its global expansion plans. Suppliers also benefited from a low-cost financing option that took advantage of DFDS’ credit rating.

DFDS also used the SCF programme within a recruitment drive to bring on board and retain top-tier third-party hauliers. Faced with a global shortage of hauliers, DFDS saw that the benefits of the SCF programme such as early payment or the certainty of payment could convince top hauliers to work with them.

This recruitment drive included a targeted social media marketing strategy launched in July 2019, which specifically promoted the benefits of SCF.

The SCF programme was also designed to help the shipping company weather the current economic and political climate in Europe, such as the potential impact of Brexit on trade in the region.

The SCF programme met DFDS’ requirements which included the ability to scale the programme and make country-specific adjustments. The programme was launched in phases, with the first phase targeting 65 suppliers and the second phase targeting 136 suppliers.

The programme was launched in September 2018 and allowed DFDS to change its payment terms to 93 days – in line with the wider industry. Within a month of the programme going live, DFDS realized €1.8 million in cash flow gain.

The first trade by a supplier occurred just 17 days after the first phase went live. It has since grown to include 91 suppliers, of which 61 are fully registered and enabled to trade and 59 have been uploaded in the last 12 months. Currently 93 percent of enabled suppliers are actively trading, and 72 percent of enabled suppliers are enrolled in auto-trade where invoices are automatically traded upon being approved.

Within a year the programme has ramped up to cover a total buyer spend of €37 million, with a supplier average spend of €400,000. It is active across 10 countries and three currencies.

DFDS has been able to create an additional €6.8 million in free cash flow to date and is looking to further expand the programme with the roll out of phase two.