Supply Chain Finance @ Siemens has been developed by Siemens Financial Services (SFS) especially for selected Siemens suppliers. Being a multibank solution, Supply Chain Finance @ Siemens is an extremely cost-efficient way for suppliers to convert 100% of the value of their receivables into non-recourse cash at a very attractive discount rate.
The Supply Chain Finance Program (Siemens SCF Program) helps to improve the cash flow of selected Siemens suppliers and optimizes their working capital. The cooperation between Siemens and its suppliers will become even more efficient with the utilization of the SCF Program.
Get paid fast, 2 days following the sale of the Siemens receivable. Receivables can be sold either automatically or case-by-case according to your need for cash.
Sale of receivables for non-recourse cash improves liquidity, reduces Days Sales Outstanding (DSO) and improves the debt/equity ratio.
Automatically get paid on invoices once they are approved and reduce Account Receivable costs relative to Siemens receivables.
Suppliers are immediately able to see the approved payments (receivables) on their SCF web portal and gain early visibility of amount and date of payment.
The Siemens Supply Chain Finance Program enables selected Siemens suppliers to improve their liquidity through the sale of their Siemens receivables at very attractive rates.
There are two types of accounts a supplier can choose to sell his receivables:
Supplier elects up-front to automatically sell all Siemens approved payments (receivables) at the pre-negotiated discount rate.
Supplier has the option to select which of the approved payments (receivables) it would like to sell at the pre-negotiated discount rate and the timing of such discounts.
When selling the receivable the supplier has to pay a discount on the face value of the receivable.The current discount rate is Cost of Funds + 2.5 % p.a.. Cost of Funds are determined daily on the basis of interest in China and currently stands at approximately 4 % (90d). The additional 2.5 % is a fixed fee which covers the costs of the program as well as the banks providing the fund for the benefit of the suppliers.
A supplier delivers products worth RMB 10 million. The payment is due in 90 days net. When participating in the SCF Program the supplier will receive payment 80 days earlier.
6.5 % p.a.
(2.5 % + 4 %) p.a.
(10 m x 6.5 % x (80 / 360))
Discounted value receivable:
(Cash received by supplier)
Cash flow benefit:
(payment after 10 instead of 90 days)