A unique solution in Colombia helps this business keep its suppliers happy whilst improving its working capital
Procaps was looking to unlock a considerable amount of working capital by securing longer payment terms with its suppliers, helping it to buy stock, without damaging these vital relationships.
Procaps worked closely with Greensill, a provider of working capital finance for companies globally, to develop a unique solution, tailored specifically to the company’s needs. The provider works with a host of banks and institutional investors to provide funding streams to underpin the process. The end result for Procaps has been a US$20m form of supply chain finance for the firm’s international suppliers. This gives Procaps the ability to unlock working capital from its imports.
By using the solution, Procaps has been able pay its foreign suppliers almost immediately, whilst having the flexibility to extend its own payment terms to up to 180 days. This has now enabled it to buy more inventory from suppliers at a better price.
These suppliers are now paid on time, whilst Procaps unlocks cash from its balance sheet so the company can put it to work. This has had a tremendous benefit for Procaps, its suppliers, and even the customers who rely on medications and supplements for their health.
The programme was implemented through the provider alone, funded by the company’s high-yield fund, using money from foreign capital markets and bringing it into Colombia. The first transactions took place in November of 2018.
Best practice and innovation
No other company – and certainly not any traditional banks – located in Colombia offer a supply chain finance solution like the one that has been implemented by Procaps. Greensill claims to be the only finance provider bringing money from foreign capital markets into Colombia. Not only is the programme the only one of its kind within the country, it was also deployed quickly, taking less than two months to implement. It means Procaps is able to offer supply chain finance for foreign suppliers that are not covered by their local banks.
The programme provides Procaps’ suppliers with certainty that they will be paid promptly, without having to wait. Eliminating any potential uncertainty regarding payments has helped Procaps maintain strong relationships with its suppliers.
Aside from the assurance that suppliers are paid on time, the greater flexibility offered to Procaps has enabled the company to do more with its capital. This has made it possible for Procaps to purchase more inventory from its suppliers at more competitive prices, benefiting its customer base throughout Latin America, and also within the Latino community in the US.
Unlocks a considerable amount of working capital.
Secures longer payment terms with suppliers.
Helps Procaps to buy more stock and negotiate better pricing.
Provides Procaps’ suppliers with certainty that they will be paid promptly.
Maintains vital supplier relationships.