Photo of Anushuman Rao, J.P. Morgan collects the award on behalf of HCL Technologies Ltd.
HCL Technologies Limited (HCL) is a global IT services and consulting company with a vast supply chain that comprises over 6,600 suppliers across more than ten markets.
in partnership with
In 2021, HCL conducted a benchmarking analysis and found that its working capital metrics fared below its industry peers, where a high proportion of working capital was trapped within its supply chains. Further assessment revealed that HCL was managing disparate payment terms across supplier categories and markets.
To improve its working capital, HCL desired a global supply chain programme that would enable it to support its supplier ecosystem, while allowing them to harmonise payment terms across its expansive supplier base.
HCL opted to go with a global Early Payment Programme (EPP) – a solution provided by J.P. Morgan that leverages the bank’s strategic alliance with fintech, Taulia – to accelerate supplier payments and optimise working capital via a single, agile global payments platform.
Currently under implementation, a HCL supplier who joins the EPP can opt to be paid earlier than the contracted payment term, as the supplier can elect to receive early payments on outstanding invoices for a discount. Suppliers can also experience better rates as they can take advantage of HCL’s outstanding credit quality to secure funding from J.P. Morgan.
For the company’s 400 largest suppliers by annual spend, the EPP will standardise payment terms based on three key supplier categories – business services, contingent labour and IT services – while payment terms for the remaining 6,200 suppliers will be standardised based on the key vendor locations of US and India, among others.
Leveraging the power of Taulia’s platform, HCL has been able to automate supplier segmentation, which allows for targeted outreach that facilitates rapid supplier onboarding in a fully digitised manner, ultimately helping to support every supplier across HCL’s vendor ecosystem, regardless of their size.
Taulia’s industry-leading technology also provides the seamless integration and exchange of data between the Taulia platform and HCL’s enterprise resource planning (ERP) system, and together with feature-rich analytics tools on both the buyer and supplier user interfaces, enables invoicing activities to be fully transparent and managed automatically, in real-time.
Leveraging J.P. Morgan and Taulia’s strong supplier connectivity and use of big data analytics to simulate supply chain scenarios, the EPP is expected to help HCL unlock nearly US$320m in working capital annually. The power of the EPP solution also lies in the ability for HCL to switch from a supply chain financing-based programme (bank-funded) to a dynamic discounting approach (corporate-funded), should HCL opt to fund its vendor ecosystem using its own surplus cash.
As global supply chains continue to be disrupted, effective working capital management has become increasingly important for global companies, hence HCL took the opportunity to review and benchmark its working capital metrics against industry peers.
To unlock working capital trapped within its vast supply chain, HCL tapped an innovative EPP that enables the company’s suppliers to get paid earlier than the payment due date in exchange for a discount. The solution provides insights that allow HCL to extend payment terms based on supplier categories and locations, maximising the amount of working capital that can be released.
Integrated with HCL’s ERP, the platform also ensures an automated experience for suppliers, including supplier segmentation, outreach and onboarding, as well as the ability to seamlessly manage invoicing activities digitally.
Future proof solution.
Vineet Sood, Executive Vice President – Finance and Treasury says, “The health of our supplier ecosystem has always been a priority for us. We expect the unique EPP to deliver increased efficiencies for our vast network of 6,000-plus suppliers.”
The Adam Smith Awards Asia is the industry benchmark for best practice and innovation in corporate treasury. The 2022 awards attracted a record-breaking 416 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia