The challenge
Sensis is an Australian digital marketing company, specialising in digital platforms and search engine marketing, as well as providing listings for businesses in both digital and phone book directories. Its well-known brands include the Yellow Pages and White Pages.
The company operates in a highly competitive market, and Sensis was looking to add efficiencies to its working capital management in order to maintain its competitive edge.
The solution
Sensis’ treasury team was aware of payment cards helping companies operating in other industries, and engaged Bank of America for advice on how the use of procurement cards could help improve the way the company managed its spending with certain suppliers.
A key objective for Sensis was to extend payment terms. A major benefit was that by using a procurement card to pay suppliers, they would be paid instantly, but Sensis would be able to extend payment terms with the bank for 55 days.
Typically, procurement cards are used by businesses for ad-hoc and small levels of spending, but Sensis wanted to take a different approach. It was keen to partner with its largest suppliers and also improve working capital.
Other key objectives of the programme included:
- Ensuring no additional costs incurred from partners.
- To use Bank of America’s supplier matching tools and expertise to quickly implement and expand the programme.
Sensis worked closely with Bank of America and MasterCard, conducting workshops to identify potential suppliers who would be most suited to accept card payments.
Best practice and innovation
- Conducting key analysis and implementing a roadmap for growth – completing a detailed analysis of its accounts payables data to explore other opportunities.
- Ensuring commitment to the project from all employees.
- Ensuring procurement cards are a long-term strategy within the business.
Key benefits
- Extended payment terms: the company effectively secured an extension of 55 days on payment terms (without impacting their suppliers’ cash flow), which helped to free up significant levels of working capital.
- Reduced financing costs: Sensis cut the cost of financing as it could lessen its reliance on other credit facilities. The extended payment terms under the procurement card system provided the company with a cheaper source of additional working capital.
- Increased cash flow: the use of the procurement cards has significantly increased cash flow.
- Enhancing competitive edge in the market: increased working capital whilst maintaining an excellent working relationship with the company’s key suppliers.
