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Best Sustainable Treasury Solution Highly Commended: PureCircle (Ingredion)

Published: Feb 2023

 

Photo of Aziz Parvez, Bank of America and Sez Chieh Khoo, PureCircle (Ingredion).

Chiow Pheng Soh

China Finance Lead

PureCircle, a subsidiary of Ingredion, is a producer and innovator in the area of stevia sweeteners for the food and beverage industry. PureCircle has offices around the world, with the headquarters in Westchester, Illinois.

in partnership with

Sustainable SCF program for farmers in China

The challenge

PureCircle predominantly sources stevia leaf from China. PureCircle’s goals were to strengthen relationships with farmers of their proprietary leaf, support farmers’ cash flow and encourage further ESG transformation of farming practices through a sustainable supply chain finance (SCF) program. These objectives were challenging given the farmers typically operate on a small scale, dispersed over China and often have manual finance and payment processes.

PureCircle already undertakes Supplier Ethical Data Exchange (SEDEX) audits, and is on track to meet the ISO 26000 social responsibility standards by 2023. To address the specific challenges of farmers, PureCircle worked with Bureau Veritas, an independent inspection and certification provider, to create an evaluation schedule for its farmers based on the Sustainable Agriculture Initiative’s Farm Sustainability Assessment. Farmers are rated gold, silver or bronze based on their ESG performance. This scoring is translated into tiered pricing with gold standard suppliers being offered the best financing rate under its SCF program. Based on PureCircle’s credit rating, the program’s pricing structure and ongoing assessment aim to further incentivise uptake of the program and continuous improvement in sustainability standards with its suppliers.

The solution

PureCircle worked with Bank of America (BofA) to re-engineer the payment process into a structured four-stage system aligned to the agricultural cycle (down payment, invoice, harvesting and quality testing). Further process improvements were made by BofA to reconcile invoices with purchase orders, digitise paper-based data, and minimise errors and duplication. Under this process, PureCircle uploads a single file to the bank’s proprietary platform, CashPro Trade, which immediately notifies suppliers of invoices ready to discount.

The program’s most important element has been a tailored and extensive education program for farmers, with all documentation translated into Chinese. The training, conducted in Mandarin, outlined the benefits, processes, systems and sustainability accreditation, of which most of these farmers have little interaction or awareness. This approach has led to a 50% improvement in the average turnaround time for onboarding suppliers in China. PureCircle launched the program for a pilot group of 14 suppliers in July 2022, just five months after awarding the mandate to BofA. Further expansion of the program is planned, and PureCircle expects 100% of invoices to be discounted, with US$7m supplier utilisation.

Best practice and innovation

PureCircle’s sustainable SCF program uses the highest standards of inspection and verification with Bureau Veritas as the independent agency. The assessment includes 112 questions, covering 17 areas and was carried out under the challenging circumstances of COVID-19 restrictions.

Working with its suppliers, PureCircle has created a best practice payment process for the Chinese agricultural industry. The process is structured into four phases, which is aligned with the agricultural cycle to support farmers’ cash flow needs. By simplifying and digitising the invoice process, they have reduced invoice processing times from around 21 to just seven days, and gained efficiencies by further automating processes. The approach to translate documentation and training materials into Chinese and offer training in Mandarin is nothing short of a best practice, and is reflected in the strong and swift uptake of the program as suppliers embrace the long-term value of sustainability accreditation.

Key benefits

  • Process efficiencies.
  • Increased automation.
  • Risk mitigated.
  • Improved visibility.
  • Errors reduced.
  • Manual intervention reduced.
  • Future proof solution.
  • Exceptional implementation (budget/time).
  • Quality accreditation achieved.

“By understanding the needs of our suppliers and moving them along the journey of digitisation and ESG accreditation, we have strengthened our supply chain and moved the industry towards more sustainable profitable practices,” says Chiow Pheng Soh, China Finance Lead.

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

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