Category Archives: Financial Management

Sustainability Drives Supply Chain Professionals to Learn New Finance and Accounting Concepts

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At JDA’s Focus event, Rich Beck, the Sr. Vice President of Global Operations at PepsiCo, gave the keynote on the second day of the conference. Rich said that their supply chain goals included “digitizing the value chain” (JDA was a key solution provider in this area) and “sustainability.”

I’ve been covering supply chain management for twenty years. Last year, I spent 20 percent of my time on the road. And I hear many, many supply chain speeches. I can count on a few fingers of one hand the number of supply chain executives I have heard say sustainability was one of their major goals.

That will change. 72% of the companies included in The S&P 500 Index® publish sustainability reports, up from just under 20% in 2011. Over time, companies’ sustainability efforts become more mature and corporate sustainability goals filter down and become key supply chain goals as well. And these are not incompatible goals. At PepsiCo supply chain sustainability includes “reducing their inputs while optimizing outputs;” but really, that has always have been a goal for supply chain organizations.

The CDP, formerly the Carbon Disclosure Project, is the best known of the organizations that are helping (or pressuring, depending on your point of view), companies to do better. Thousands of companies work with the CDP to measure, disclose, manage and share environmental information.

The CDP scores companies on their performance. “A high performance score signals that a company is measuring, verifying and managing its carbon footprint, for example by setting and meeting carbon reduction targets and implementing programs to reduce emissions in both its direct operations and (the extended) supply chain.” Companies score higher if they are focused not just on internal emissions, but the emissions caused in their extended value chain. This causes a ripple effect as big companies with sustainability goals request their suppliers to also reduce their emissions.

Read more at Sustainability Drives Supply Chain Professionals to Learn New Finance and Accounting Concepts

What is your opinion towards “sustainability”? Do you think it is a priority? Share your thoughts with us in the comment box below.

Six trends changing the face of supply chain finance

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Six trends changing the face of supply chain finance

Supply chain finance is revolutionising the way companies buy and sell, but its full potential has yet to be realised.

The amount of cross-border SCF conducted today is just a tenth of what could be done say European banks. One reason is the complexity of SCF. However innovations in both developed and emerging economies promise to change that modest uptake in the coming years.

Making SCF easier to use and understand is essential if it is to become the norm in financing global trade. Several trends should speed that process:

1. SCF is becoming widely accepted in cross border trade

Bankers expect the European and US crossborder markets to grow 10-20 per cent a year for the rest of this decade. Already some banks have seen annual growth of 30-40 per cent andin the UK and Germany that figure is closer to 70 per cent, according to Demica.

2. More buyers are financing their suppliers

SCF has traditionally focused more on the relationship between suppliers and their banks. This is changing. New technology is helping buyers use SCF to help their strategic suppliers at better rates than they might find elsewhere, thanks to often higher credit ratings.

3. Non-bank players are emerging as an alternative source of SCF

New entrants, including peer-to-peer lenders, dynamic discounters and early payment marketplaces help buyers and suppliers exchange purchase orders, invoices and accelerate cash transfers. Private investors, financial institutions or even buyers provide funding for these new solutions to invest in their own payables.

4. Providers unite to offer a global service

Fragmented banks are recognising the need to partner logistics companies, local banks, export credit agencies and other transaction banks to offer corporates solutions across the supply chain. That is a change from the more fragmented approach until now.

5. Technology is replacing the paperwork

Electronic documentation is playing an ever greater role in international trade business as corporates automate trade supply chains toimprove speed and efficiency. That means corporates who use a number of banks require them to deliver electronic solutions on a common platform.

6. Countries are getting involved

Governments around the globe are paying more attention to supply chain finance. The UK for instance has initiated an SCF programme with some of Britain’s leading companies and banks. In the US, the Treasury’s Invoice Processing Platform uses electronic invoicing to ensure that suppliers are paid on time or even early.

Do you have any opinions about supply chain finance? Share it with us in the comment box.

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Where are Investors Placing their Supply Chain Bets for the Next Five Years?

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Where are Investors Placing their Supply Chain Bets for the Next Five Years?

When practitioners think of the advances that have been made in supply chain management, we tend to think about people, processes, and technology. We tend to forget how important the financial community is in terms of accelerating the development of new technologies and even the wider supply chain environment we inhabit.

The Council of Supply Chain Management Professionals (CSCMP) had a roundtable on this topic. The two financial panelists were Dave Anderson, the Managing Director at Supply Chain Ventures, and David Beatson, the CEO at Ascent Advisors. Both Supply Chain Ventures and Ascent Advisors are active players in the world of supply chain management venture capital. Supply Chain Ventures is an early stage investor, Ascent Advisors is late stage.

Early stage investors, known as angel investors, are looking for companies with $100 million is exit potential. Their investment horizon is one to ten years. Their due diligence involves looking for fatal flaws in a firm’s business model or weaknesses in the executive leadership. Only 10 to 20 percent of the investments make returns above what was invested in them. Making money in this game is about the small number of firms that are paying back ten times or more what was invested in them. The exit strategy involves an Initial Public Offering (IPO), the firm going bankrupt, or best case scenario an outside investor buys the company. Being an early stage investor takes strong nerves. In the event of bankruptcy, not all that uncommon in young companies, all assets get exposed, including the assets of investors.

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Balancing Financial Settlement and Inventory Levels Remain Key Concerns For Supply Chain Managers

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Balancing Financial Settlement and Inventory Levels Remain Key Concerns For Supply Chain Managers

U.S. companies made only marginal improvements in their ability to collect from customers and pay suppliers in 2013, while showing no improvement in how well they managed inventory, according to the 16th annual working capital survey from REL a division of the Hackett Group, Inc.

“For inventory, the global marketplace has made issues like demand planning more important than ever before,” says Analisa DeHaro, Associate Principal for REL. “Companies need to factor in lead times that may not have been an issue when manufacturing was done closer to home. The best companies are becoming more savvy about this, and are more effectively balancing the various elements of inventory management.”

The amount tied up in excess working capital at nearly 1000 of the largest public companies in the U.S. is over a trillion dollars, according to the REL research.

The U.S. economy was slow but stable, with gross domestic product increasing by 3.2 percent in 2013. But at the same time, the REL research found that gross margins decreased by 0.3 percent, indicating that companies are spending more internally to generate revenue.

The researchers also found that companies are continuing to borrow, using low interest rates to improve their cash position, with cash on hand increasing by 12 percent, or $110 billion. At the same time, companies continued to ramp up capital expenditures, which have risen by 43 percent over the past three years.

The value of total net working capital rose by 3.2 percent in 2013, and days working capital improved by less than 1 percent. While days sales outstanding and days payable outstanding improved only slightly, days inventory on hand showed no change at all.

What do you think about this article? Share your opinions with us in the comment.

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Teaching the ins and outs of financial management

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Teaching the ins and outs of financial management

Standard Chartered volunteers share know-how with children at 7 schools

Almost 450 employees from Standard Chartered Bank (Thai) recently put their skills to good use by going out into the community to help ensure that Thailand’s next generation does not fall into the painful trap of financial mismanagement.

They choose their holiday date, July 1, to conduct 35 sessions in seven schools in Bangkok, Ang Thong and Saraburi, reaching out to 1,380 students in total in just one day.

Standard Chartered’s staff members were truly able to bring the bank’s ideal to life by devoting the day to helping Thai children gain a better understanding of financial education.

Financial education and inclusion are important issues for Standard Chartered. The bank believes it is important to ensure that people have good financial education, so that they will be able to use financial services actively and responsibly.

Moreover, financial education is a crucial building block of economic citizenship and a means to protect Thais from overextending themselves financially, which in turn will promote stability in the Kingdom’s financial system.

This major exercise was organised by the bank to mark Standard Chartered’s 120th anniversary in Thailand.

Giving back to the community and supporting sustainable economic growth are the cornerstones of the bank’s approach to sustainability.

The lack of appropriate financial education limits economic opportunities for young people. Without such education, many youths are not prepared to take advantage of financial services that could help them save and plan for the future.

What do you think about this article? Share your opinion with us by leaving comments below.

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Leverage cloud financial intelligence systems with AWS

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Leverage cloud financial intelligence systems with AWS

The use of cloud financial intelligence systems, typically from cloud financial management system providers, offers insights into cloud usage. Cloud financial management providers, such as Cloud Cruiser and others, can tell you how effective the cloud platforms are in delivery of services. This includes how each service tracks back to cloud resources that support the services, as well as who is consuming the services and by how much.

However, the true value of these systems is not the simple operational cost data that they are able to gather and report on — it’s the ability to leverage deeper analytics to determine usage patterns, and how those patterns will behave over time. This means you have the ability to better understand how your AWS instances (and other cloud services) were put to use in the past, and more importantly, how they will be leveraged in the future, including the ability to properly estimate cloud resource utilization in the context of complex and widely distributed architectures.

It’s all about the ability to make the most out of data from multiple components of the architecture, not just AWS. Most enterprises that deploy cloud-based systems do so using either public and private clouds within a multi-cloud architecture, which may also be mixed with traditional (or legacy) systems. This makes the financial tracking much more complex, but also much more valuable.

For example, a production management system may leverage core storage services from AWS, session management services from their OpenStack private cloud and core database services using a traditional Oracle database running in their data center. Thus, the cloud financial management system needs to gather information for many different system components, including the private and public clouds , as well as the local database. System owners can use this information to determine the amount of resources consumed, as well as patterns of consumption over time. They have a complete picture as to how a holistic system is functioning, including cloud and non-cloud components.

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Retirement planning: How not to outlive your money

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Retirement planning: How not to outlive your money

Retirement is ultimately an exercise in risk management – and dealing with risk involves an educated understanding of how unforeseen events can sabotage your golden years.

The greatest single hazard is what planners call “longevity risk” – the possibility that you may outlive your money.

Actuaries tell us that a woman who is now 65 can expect to live, on average, to 88, while a man can look forward to reaching nearly 86. Remember, though, that those are averages – about half of retirees will outlive those figures. In fact, if you are now a 50-year-old woman, there is nearly a 10 per cent chance that you will live to celebrate your 100th birthday.

How do you plan for a retirement that may be as long, or longer, than your working life? For the dwindling number of Canadians who are members of defined-benefit plans with automatic cost-of-living adjustments, there’s little to worry about. For most of us, though, there is a lot of risk in planning three decades ahead – especially given two additional hazards.

A good retirement plan should address longevity risk, inflation risk and market risk. Here are the pros and cons of three key risk-management tools:

Annuities

An annuity is essentially a contract with an insurance company, which guarantees to pay you a steady stream of income until the day you die.

Work

Taking a part-time job in the early years of your retirement can make a big difference to your financial picture. Earning even $4,000 a year replaces the income you could reasonably expect to generate from a $100,000 portfolio. It also provides a buffer against unexpected inflation.

Your portfolioare

Many people can achieve big gains from simply adjusting their portfolios to reduce the cost of investing and to ensure the right mix between income producers (like bonds) and more inflation-proof investments (like stocks).

The bottom line

It all sounds very intimidating – but doesn’t have to be. Despite their challenges, Uncle Jim and Aunt Mary never complained, but simply found ways to live on less.

How do you plan your retirement? Do you find this article useful? If yes, welcome to share it or you can leave comments if you have opinions. You may also send us a message for discussion.

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Part-Time Entrepreneurs Need to Be Empowered

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Part-Time Entrepreneurs Need to Be Empowered

According to Industry Canada, survival rates for small and medium-sized businesses decline over time. About 85 per cent of businesses that enter the marketplace survive for one full year yet only 51 per cent survive for five years.

Yet, with commitment and passion, many have successfully made the transition from part-time start-up to full-time career.

The Intuit survey found that about one third (35 per cent) of start-ups trying to go full-time would quit their jobs if they could pull in a mere $30,000 or less. Depending on your financial goals, taking your business full-time could be closer than you think.

Are you ready to make your dream a full-time career? Here are some tips to help you take it to the next level:

  1. Define a goal and build on it
  2. Continue to innovate
  3. Brush up on your financial literacy
  4. Make your network work for you
  5. Take advantage of free services

Share your thoughts about this by leaving comments below or feel free to send us a message.

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Aspiring for a start-up?

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Aspiring for a start-up? Here are golden rules of money management

Here are some golden rules to manage your financials when you wish to begin with your own start-up:

  1. Pre- startup phase
  2. Startup phase
  3. Post funding/exit

Here are some tips and tricks to go forward with:

  1. Take insurance
  2. Renting is better
  3. Go debt-free
  4. Fix the loan

Feel free to send us a messageor leave your comments below.

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Indonesia to Ease Curbs on Foreign Investment as Growth Slows

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Indonesia to Ease Curbs on Foreign Investment as Growth Slows

Indonesia said it will allow foreign investment in airports and ports as the government seeks to revitalize an economy growing at the weakest pace since the global recession.

The country may also ease limits on overseas holdings in its telecommunications and pharmaceutical industries, the Investment Coordinating Board said today, hours after a report showed economic expansion slowed for a fifth quarter. Gross domestic product increased 5.62 percent in the three months ended Sept. 30 from a year earlier, as a declining rupiah restrained investment in Southeast Asia’s largest economy.

Indonesian policy makers are grappling with a depreciated exchange rate, elevated inflation and diminished foreign capital inflows undermining President Susilo Bambang Yudhoyono’s legacy of economic stability before he steps down next year. His failure to fix infrastructure gaps in his two terms has added to price pressures, threatening his party’s chances at elections in 2014.

“The dust has yet to settle on the slowdown definitely,” said Wellian Wiranto, a Singapore-based investment strategist at the wealth-management unit of Barclays Plc. “Hopefully it will be replaced by construction dust coming from new infrastructure investment if they stick to these opening up measures.”

The rupiah fell 0.5 percent to 11,415 per dollar as of 3:45 p.m. in Jakarta today, according to prices from local banks compiled by Bloomberg. It has dropped more than 15 percent this year, the worst performer among Asia’s 11 most-active currencies tracked by Bloomberg.

Indonesia still remains as a major investment destination. If you want to learn more about investment, feel free to send us a messageor write a comment.

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