Why hybrid programs are the future of working capital

Optimizing working capital isn’t just a finance buzzword—it’s a strategic necessity we must all embrace. I’m encouraged by the ways corporates are starting to re-evaluate their approach to supply chain financing (SCF). The next evolution is here, and it's all about hybrid funding models that empower you to take control, diversify your funding sources, and future-proof your programs.

This is the third installment in our working capital series. If you missed the first two, you can catch up on why working capital matters more than ever and discover innovative approaches to its optimization.

Beyond either/or: Control, flexibility, and true partnership

Historically, we’ve seen most supply chain finance programs tied tightly to a company’s main banking partner. This approach has its merits, as stability and strong banking relationships are critical for accessing expertise and a wide range of financing resources. But today's environment demands more. It calls for greater flexibility and optionality. We've all seen how economic shocks and disruptions highlight the risks of putting all your eggs in one basket.

That’s why we’re seeing a fundamental shift. I believe the right strategy is not about “bank vs. corporate.” Instead, it's about creating an ecosystem where corporates can orchestrate their own working capital strategy, with banks as collaborative partners. Together, we can diversify the funding sources of working capital programs.

The old model: Bank-led and bank-limited

Traditionally, large corporates have relied on their banking partners for SCF solutions like payables finance or dynamic discounting. While these bank-led programs offer benefits, they also come with limitations that we need to address:

• Concentration risk: Relying on a single bank exposes companies to risk and limits flexibility.

• Capacity constraints: Banks have lending limits, and their ability to extend funding can change rapidly in times of market stress.

• Supplier coverage: Banks may not be willing to fund all suppliers, leaving gaps in your program.

• Jurisdictional footprint: Banks don’t always have the appetite, or the on-the-ground experience, to operate in every market or region where your suppliers are located.

Technology driven, corporate controlled, bank enabled

The leading treasury organizations we work with recognize that achieving greater control, alongside liquidity and resilience, is essential for long-term success. By taking ownership of your SCF programs, you can:

• Diversify funding: Blend bank, non-bank, and internal funding for maximum flexibility.

• Expand supplier reach: Offer competitive financing to a broader supplier base, no matter their size or location.

• Mitigate risk: Avoid over-reliance on any single partner and reduce exposure to changing market conditions.

• Leverage technology: Use modern SCF platforms as your “control tower,” integrating multiple funders with real-time transparency.

Hybrid funding: The best of all worlds

The hybrid model is powerful. It allows you to leverage both bank funding and your own excess cash, switching between them as your needs change. We see this not just as a convenience—it’s about building resilience and agility.

• Bank funding (Payables Financing): This remains vital for supporting suppliers while helping your enterprise improve DPO.

• Self-funded (Dynamic Discounting): This lets your treasury teams deploy surplus cash, turning procurement outflows into “treasury alpha.”

Hybrid orchestration means you can switch seamlessly between these options. It’s a model that puts you in the driver’s seat while keeping banks as valued partners. It’s a strategy where everyone wins.

Benefits of hybrid models

• Scalability: Easily access deeper pools of capital and onboard more suppliers with less friction.

• Resilience: If one funding channel tightens, your program continues uninterrupted by tapping into other sources.

• Program continuity: Suppliers get predictable access to capital, regardless of who funds the invoice.

• Competitive advantage: Attract and retain suppliers with reliable, flexible financing options.

• Strategic use of cash: When you have excess cash, you can put it to work for above-market returns.

Technology as the foundation

Technology is no longer just a supporting player; it’s the foundation that makes these modern, hybrid models possible. We need intelligent platforms that unify funding sources, suppliers, and workflows into a single, dynamic ecosystem.

An effective platform connects seamlessly with multiple funders, allowing you to access the best capital sources as your needs change. It empowers you to route invoices with precision, applying business rules based on supplier geography, size, or cost of funds. This automation ensures every transaction aligns with your strategic goals.

Just as importantly, leading platforms give you the real-time visibility you need to act with confidence. By enabling self-service and automation, technology doesn’t just streamline processes—it transforms them.

Not antagonistic, but assertive

Taking control doesn’t mean cutting banks out. It’s a strategy where we work with the banks, not against them. It positions banks as valued partners in a broader ecosystem. Banks can participate in programs at scale, while your corporate team retains strategic flexibility. This is a true win-win.

As we look to the future, control and flexibility will define successful SCF programs. Hybrid funding models unlock these benefits, enabling corporates to thrive no matter what the market brings. The future belongs to those who take control, and we're here to help you win.