Trade Payables Solutions

Trade Payables Solutions

With GSCF, you can improve your working capital without compromising relationships in your supply chain. Our Trade Payable Solutions allow you to extend your DPO with your Suppliers; both with or without their legal involvement, allowing you to; Improve your liquidity Enhance your Balance Sheet working capital position Lengthen the payment terms of your own Suppliers. Obtain low cost short-term financing without increasing leverage DPO DSO We offer a range of solutions tailored to your needs. DSO DPO DSO = Days Sales Outstanding/ Receivables days DPO = Days Purchases Outstanding/Payables days 2 Trade Payable Solutions

Which program is right for you? Are you the Seller or in the relationship that needs more liquidity? YES Do you need to improve liquidity in your supply chain? NO BUYER SELLER Will the Seller accept being legally involved? Seeking to shorten DSO or extend s DPO? DSO BOTH YES NO DPO Supplier financing Trade payables financing Factoring Extension of Terms Distribution Financing Receivables servicing s extended payment terms and offers Suppliers access to financing, based on the higher credit rating of the. s looking to extend their payment terms, to Suppliers who do not offer such extensions. Improve your cash flow by accelerating your cash collections and reducing your credit collection risk. Increased payment terms to your s without impacting your working capital or balance sheet. Maximising benefits for all stakeholders by combining reduced DSO for Suppliers and longer DPO for s. Automatic payment reconciliations, reduced administration costs and improved data visibility. Trade Payables Solutions Trade Receivables Solutions 3 Trade Payable Solutions FUNDED UNFUNDED

Trade Payables Financing = Supplier DSO DPO DSO DPO Supplier Program overview Benefits to Trade Payables Financing has been designed for s looking to extend their payment terms, towards their key Suppliers. The structure is relatively fast to implement, with light documentation requirements. Suppliers are not legally involved in the program and only need to acknowledge that funds will be paid by the Funder on behalf of the. Quick to implement, improved liquidity and financial stability. Extend payment terms towards key Suppliers who do not currently offer such extensions As Suppliers are not legally involved, s have the freedom to implement a truly tailored program If an early payment cash discount is offered by the Supplier, the program can collect this for the Fast implementation, with light documentation requirements Credit lines with relationship banks are freed up for alternative investments The program could be classified as Trade Payables (thus extending DPO) rather than short-term debt, depending on the s jurisdiction and auditors Benefits to Supplier Trading terms remain unchanged in addition to: Enhanced relationship Reduced credit risk due to payment from a Funder Timely settlement of receivables leads to more accurate cash forecasts Ideally suited to s with high concentration of business with few suppliers looking to extend payment terms and also achieve working capital benefits. 4 Trade Payable Solutions

Supplier Financing Program overview Supplier Financing allows s to obtain extended payment terms and offers Suppliers access to working capital financing, based on the higher credit rating of the. Supplier DSO DPO Benefits to Improved liquidity and financial stability Balance Sheet benefit - increased DPO Improved liquidity by receiving increased payment terms Benefits to Supplier Enhanced relationship with by extending their credit terms Access to low cost financing based on highly rated Timely settlement of receivables leads to more accurate cash forecasts Supplier DSO DPO Ideally suited to Large, well-rated s who have many Suppliers and are seeking to optimize working capital. 5 Trade Payable Solutions

Our software platform Our proprietary technology platform offers unparalleled flexibility and automation for management of supply chain finance programs. Some benefits include; Multi-currency, multi-lingual platform designed for your global requirements Fully automated processing that reduces administration costs and risk of manual error Credit limit approvals at Purchase Order stage Real-time payment reporting empowering your business to make informed credit decisions Technically integrated with Funders and credit insurers for reduced administration and faster credit limit approvals Visibility Automation Ease of Use Web portal so you can always access your program information. Easy to understand, customisable dashboards at summarised and detailed levels. Identifies and notifies stakeholders of potential credit risks automatically. Automated notifications and alerts customized to your requirements Real-time reconciliation of payments to invoices and available credit limits Credit limit requests automatically sent to approvers enabling faster processing Processing in accordance with credit insurance policy conditions, always ensuring compliance A system that points you in the right direction letting your people know what requires their attention. Extensive training from our multi-lingual operations teams located across Europe and the Americas. Our in-house development team allows us to add further individual features if required. ISAE3402 ASSURED 6 Trade Payable Solutions

Typical Program Cycle 1 1 Order Placement 2 Invoice and goods sent out Supplier 2 3 uploads Supplier invoice data to GSCF system 5 3 4 7 4 Invoices verified by 5 Report sent to confirm amount due to Supplier from Funder 8* 6 Funds paid to Supplier by Funder 7 Report sent to confirming amount and due date 5 8 pays amount due to Funder on agreed terms 6* FUNDER Notes * By changing the timing of steps 6 and 8 relative to standard credit terms determines the improvement in DSO and DPO for Supplier and. 7 Trade Payable Solutions

FAQs 1. Is there a minimum program size? Supplier Financing programs are typically sizeable, as they involve large buying corporations, and become a useful solution when there is a significant number of Suppliers on-board the program. However, Trade Payables Financing programs (also called Synthetic Receivables) are typically smaller as they are conceived as a single -single Supplier financing solution. These programs tend to grow rapidly and have more Suppliers added, although there are usually less than 10 Suppliers involved as it is only meant for key Suppliers. GSCF considers Trade Payables Financing transactions with total program limits above USD 10 million (or equivalent). 2. What type of agreement is required? In Supplier Financing programs, the Funder needs to execute a Receivable Sale and Purchase Agreement (RPA) with each Supplier to be on-boarded onto the program and a Promise to Pay with the sponsoring the program. In Trade Payables Financing programs, the and Funder execute a Supplier Trade Settlement Services Agreement (or STSSA) and Suppliers only sign a non-legally binding letter acknowledging the program. The STSSA is a brief document that is usually executed quickly. 3. What is the involvement of the Supplier/s in Trade Payables Financing? Supplier/s issue an acknowledgement letter indicating that they are aware of the program. This non-legally binding letter which reduces the risk involved for the Funder and therefore the overall program costs. In addition, this contributes to achievement of favourable accounting treatment for the ; i.e. trade payables as opposed to bank debt. 4. What is the accounting treatment of Trade Payables Financing programs? The sponsoring the program is normally able to account for the extension of terms granted by Suppliers through the program as trade payables, rather than debt, hence enhancing working capital via the increase in Days Sales Payables (DPOs). It is worth noting that the accounting treatment will be ultimately defined by the company s auditor and will depend on the accounting rules applicable. 5. How much will a program cost? Supply Chain Finance programs are designed to be more competitive than short-term bank financing due to the lower level of credit risk taken by the Funder. Program cost will be determined by: The financing term The level of credit risk involved for the Funder Credit mitigants required on the risk, including credit insurance or collateral posted by Legal setup costs (variable depending on country) 6. Will we need to post collateral? Depending on the risk profile of your company, collateral may be required by the Funder in the form of cash or a letter of credit for a percentage of the program credit limit. 7. Is credit insurance required? Credit insurance cover is sometimes required in Trade Payables Financing programs for s whose related credit-risk cannot be assumed by the program Funder on a clean basis. GSCF tends to obtain credit insurance on s covering between 90-95% of the exposure. 8 Trade Payable Solutions

8. What are the key milestones and timelines to implement a Trade Payables Financing program? Below is a high-level overview of the steps leading to the successful implementation of a Trade Payables Financing program: i) Initiation: Submission of information related to your key Suppliers where you would wish to finance your Trade Payable and collection of your financing requirements. ii) Structuring: GSCF reviews with its partner finders and credit insurance providers if required, and reverts with a solution structure and initial offer via a Term Sheet including: a. Supplier relationship selected for financing via the program b. Credit Limit offered c. Terms of the program d. Initial pricing estimate e. Conditions precedent to program activation e.g. financial statements f. Information required for a final offer iii) Process Definition: Once the Term Sheet is signed and we approach activation of the program, our Business Operations team collects your reporting requirements and performs any implementations required in order to customize our platform and its capabilities to your specific requirements. iv) Activation: Once the required program documentation has been executed, we will perform the final steps leading up to program activation, such as: a. Conduct technical discussions and perform testing for transmission of your A/P data to GSCF s platform. b. Conduct training sessions on using our web-accessible portal c. Set up user accounts and accesses to the program portal 9. How will you support my business once our program has been activated? Upon setting up a program a dedicated Credit Operations team will be assigned to the program and will be responsible for activities such as performing and monitoring day-to-day tasks and communication related to the program, as well as handling queries and requests you might have. 10. How can GSCF offer my business continuously competitive financing? GSCF s financing vehicle (ADF), acts as an aggregator of liquidity from multiple financing parties (banks and institutional investors). ADF will select the most competitive financing available for your business on an ongoing basis. These sources of financing can be replaced depending on their competitiveness, without having any administrative or program impact to your business. 9 Trade Payable Solutions

To learn more about our products, technology platform and financing options please contact a member of our team. Matthew Reddington Business Development Manager +41 41 922 2264 Direct m.reddington@gscf.com Asad Umar Business Development Manager +41 41 922 2261 Direct a.umar@gscf.com Global Supply Chain Finance Limited +41 41 922 2200 Tel +41 41 922 2201 Fax www.gscf.com Gotthardstrasse 2, 6300 Zug, Switzerland 10 Trade Payable Solutions