What happens when the rules of global trade seem to change every few weeks? According to Orbian’s Simon Allen, director of origination for the Emea region, corporates are no longer just looking to optimise working capital – they are scrambling for ways to keep supply chains moving when tariffs, geopolitical tensions and liquidity pressures can upend carefully laid plans almost overnight.
For a provider born out of a joint venture between Citibank and SAP, that volatility is proving to be fertile ground: demand is rising not only for traditional supply chain finance, but also for faster, more flexible structures that can onboard suppliers in days rather than weeks and help companies react in real time to an increasingly fragmented trading environment.
GTR: How is Orbian positioning itself in the current economic and geopolitical context?
Allen: In the current environment, which is defined by geopolitical uncertainty, supply chain disruption and continued pressure on liquidity, we are seeing a very clear shift compared to how companies have historically approached working capital. The focus has always been on optimisation of working capital, but today it’s evolving around resilience and flexibility.
Orbian is positioning itself as a partner that can help companies navigate that shift. There are myriads of ways in which Orbian can help, starting by filling in the gaps on an original single bank-led supply chain finance (SCF) programme, for example, where we are able to onboard suppliers within two days, irrespective of location, where compared to other providers, this can take up to a month.
Another strong component of our offering is our funding structure, which is 100% bank-agnostic. Our structure not only fortifies supply chain resilience, but also enhances supplier relations. Additionally, we have Flex Pay, our deferred or post-maturity payment solution, which allows companies to access liquidity through their own balance sheet without increasing financial debt or pressure on supplier relationships. Flex Pay is a fully treasury-led solution, which enables corporates to react quickly to additional liquidity needs.
As a company, we are growing and expanding. We recently acquired Roger, a payment institution located in Brno, Czech Republic, and we are also opening an office in Prague.
GTR: How has geopolitical fragmentation, such as trade corridors shifting or supply chain regionalisation, changed SCF demand?
Allen: Demand for supply chain finance is increasing and many corporates we speak to today may already have an SCF solution in place. Their question is whether or not Orbian is able to fill in the gaps or accelerate the pace of supplier incorporation. For example, if we look at our product Express-SCF, which allows us to onboard suppliers within two days, regardless of jurisdiction, this is a big acceleration compared to what you could get with another provider, or if you go down the single bank route. This is enabled by our solution that does not require suppliers to sign an agreement with us and does not require suppliers selling or assigning receivables to us. We deliver a faster, simpler experience, built on a unique Orbian capability developed in 2018 that competitors still haven’t matched.
At the same time, Flex Pay also allows corporates to include suppliers that would never join an SCF programme or accept any extension in payment terms. The key difference here between the two is that SCF is more of a marathon, whereas Flex Pay is a sprint. It helps you achieve your results sooner and faster, because it is a 100% treasury-led solution. Current times are dictated by uncertainty – trade policies are changing every two weeks, conflicts are starting to erupt and corporates need quick results and quick reactions, and Flex Pay is a good solution to have in your arsenal.
GTR: Has increased regulatory scrutiny changed how corporates approach SCF?
Allen: Increased scrutiny has really changed how corporates approach SCF in a very positive way. For instance, peers are now starting to compare themselves and their results, which breeds more competition. Another positive is we see some corporates that don’t have a supply chain finance programme in place, and that may now be compelled to find a similar solution, because they’re seeing their peers benefiting so much from it. From Orbian’s perspective, overall transparency is of benefit to all parties involved, and therefore disclosure under IFRS [International Financial Reporting Standards] and US GAAP [Generally Accepted Accounting Principles] is a good thing all round.
GTR: How does Orbian approach accounting treatments for Flex Pay?
Allen: One of the big questions we always get asked by a treasurer for the Flex Pay solution is, ‘how will my auditor see it under IFRS?’ Thanks to the funding structure that we have in place, we have been able to help achieve an appropriate accounting treatment for Flex Pay, so that it is treated as ‘other payables’ under IFRS, rather than net financial debt.
This has been approved across the board for the big four auditors, so we are starting to see the Flex Pay solution gathering a lot of pace. We now have multiple examples of positive approvals that a new client can leverage when discussing the solution with their auditor. Furthermore, we also have an opinion paper written up by some of the most knowledgeable players in the industry, detailing why Flex Pay should be treated favourably in the eyes of the auditor.
GTR: How important is funding structure, such as the multi-bank model, in making SCF resilient?
Allen: The funding structure is a key pillar of a successful SCF programme. Many of the conversations we’re having are mostly with corporates that have a single bank-led programme. One can’t really claim to have a resilient SCF programme, or indeed a supply chain, if you are single-threaded to just one source of funding.
We’ve seen countless examples where a bank withdrew funding from a certain buyer or jurisdiction, leaving the buyer in a situation where they had to scramble to find alternatives. On Orbian’s side, thanks to the SPV structure that we have in place, our solution is 100% bank-agnostic, so that means you can have multiple banks financing our early payments to suppliers on the same day, mitigating many of the risks a single source of funding brings. Yes, you can have a syndicated programme, but again, you are relying on one bank to sell the supplier receivables to the secondary market. What happens when or if that bank can no longer fund? Orbian’s structure aids in the creation of a very resilient supply chain.
GTR: How have higher interest rates reshaped demand for SCF solutions over the past one to two years?
Allen: Interest rates not only go up on an SCF programme, they also go up for suppliers with their own banks. What we are seeing is supplier trading increasing across the board. Why? Because most suppliers understand that in an SCF programme, they’re still leveraging their clients’ risk, which in most cases is more advantageous than their own. At Orbian, we are the only provider that can offer fixed rates to suppliers. This means suppliers are protected from oscillating interest rates. A supplier is able to effectively hedge against any rate increase. In the US especially, where there is a lot of talk about interest rates going up in response to the geopolitical situation, suppliers are jumping at the opportunity to fix their rate.
GTR: What role is automation or AI playing in SCF?
Allen: A scenario where we’re seeing AI rendering the overall process of setting up an SCF programme more efficient comes in the working capital analysis solution. We are using a third-party platform that uses AI for our supplier analysis and the sole purpose of that is to create a roadmap to a successful supplier strategy that combines both Flex Pay and SCF. AI can amalgamate many different data points, from supplier credit rating and payment term regulations to how material a particular buyer is to a supplier. This is key data for us, because when we train a procurement team, we can show them this data, and say, ‘you have quite a lot of leverage to increase that payment term on X supplier, whereas supplier Y is hardly going to accept a new term, hence us suggesting we place them under Flex Pay’. In a matter of days, we have a data-driven plan, which in the past would have taken weeks to do. So far, this is the role AI or automation is playing in SCF.
