Photo of Thomas Dunn, Orbian, Wadim Buettner, Osram and Joy Macknight.

Osram had three key objectives; to extend its payment terms, to enhance the relationship with its suppliers and to improve its cash flow. Osram chose a supply chain finance (SCF) solution which addressed each of these key goals.

Osram established the following objectives for its supply chain finance (SCF).

• To extend its payment terms.
• To enhance the relationship with its suppliers.
• To improving its cash-flow.

As Wadim Buettner, Global Head of Supply Chain Finance (SCF), explains, “we analysed other programme providers, mostly banks, but we decided on Orbian because of its good experience and leadership in SCF and for the multi-bank model it provides, with the ability to grow our programme needs on a global basis and in various currencies.”

The implementation of this solution did not require any technological intervention from Osram or its suppliers. Moreover, thanks to the close collaboration between Osram and Orbian, the implementation went smoothly and quickly. Since the programme has been implemented, Osram have been able to improve its cash flow, increase its payment terms and strengthen the relationship with its suppliers.

Buettner continues, “we look forward to further strong growth in cash flow and liquidity savings with the Orbian SCF programme. The solution is an innovative and collaborative approach to trade payments and receivables financing.”

The solution is made possible thanks to a unique funding model and the use of a technology platform uniting Osram and its suppliers. The platform provides instant visibility into invoices approved for payment and grants suppliers a non-recourse early payment option with a discount rate that is based on Osram’s cost of credit, reducing costs across the supply chain. Osram also demonstrates best practise with its use of this SCF solution. The SCF programme allows the introduction and variation of banks, other institutional investors and Osram’s own treasury without impacting suppliers. Sale of notes from DTCC, Euroclear or Clearstream maximises programme liquidity and minimises costs with settlement processes.

As Buettner states, “we have 100% confidence in availability of funding as Orbian has never failed to discount receivables for SCF suppliers for any reason. Our goals are 100% aligned.”

The company providing the solution is focused on delivering lowest cost SCF solutions and meeting and exceeding customer service expectations. From a technology perspective the platform has proven integration with a 100% success rate across all major ERP systems and proprietary AP systems. The company also benefits from a most experienced SCF implementation and integration team, delivering fast, efficient implementation capability carrying no out-of-pocket cash costs for the buyer or suppliers. The platform also has significant disaster recovery and business continuity plans, further enhanced by a major global financial institution’s trust department. Aggregation and daily automated reconciliation of all SCF transactions ensures the highest degree of information integrity (including exceptions handling).

Osram have identified the following benefits:

• Time taken to implement solution and realise benefits.
• Improvements in days payable outstanding (DPO).
• Improvements in the cash conversion cycle (CCC).
• Interest savings.
• Pricing enhancements.
• Satisfies compliance requirement (eg Sarbanes-Oxley (SOX)).

Buettner concludes, “we have achieved our goals with our partner who has the highest standards of security and disaster recovery and we have been able to increase the payment terms of the participating suppliers for more than 30 days on average.”