Kyriba helped Auchan build a global supplier finance program with multi-country, multi-bank and multi-language access.
Arnaud Crouzet joined the Auchan Group in 2010 as head of Group Global Payments Development. He is also the general manager of Auchan Suppliers Advanced Platform SA (ASAP SA), the company in charge of managing the Group’s supplier finance programme. Here, Arnaud explains how the programme came about and what factors have contributed to its success.
Back in 2010, requests began coming in from suppliers across the different countries in which Auchan operates to assist with earlier payment of their invoices. This was in large part due to the difficult credit environment at the time. Some suppliers were asking for factoring arrangements, while others were looking to negotiate reduced payment terms. Since Auchan has very strong and valued relationships with its suppliers, the company’s treasury function began looking into possible solutions.
"We analysed a number of possibilities, but it was reverse factoring that seemed to tick all the boxes."
Given that there were few large scale supplier finance programmes in the market at the time, there were some initial hurdles to overcome. “What we found was that many of the reverse factoring programmes that were out there were beneficial for the buyer, but not so interesting for the suppliers. Certain programmes virtually forced suppliers to join. But we felt that this was not a fair approach and it certainly didn’t match the Group’s philosophy,” he explains.
“What we were looking for was something open, transparent and flexible that we could offer to all of our suppliers. We wanted a programme that suppliers could decide to use – or not use – however they wanted.” Additionally, Auchan needed a solution that would operate on a multi-country, multi-currency, multi-bank and multi-lingual basis. The best way to achieve this, it was decided, would be to manage the programme in-house, rather than outsourcing it to a third party.
A significant number of RFPs were sent out to gather information on the type of platform that would best meet the company’s requirements – whether it be an out-of-the-box solution or something bespoke. “We wanted to get the broadest possible view of the market, so the RFPs were sent out to banks and software vendors not only in Europe but also in the US and Asia. It was a huge amount of work, but it was definitely worth the effort,” says Crouzet.
What the research highlighted was the importance of a platform that would not only meet the company’s needs from a buyer/supplier perspective, but also from a treasury perspective. After consideration, Auchan chose to work with Kyriba to deliver the platform as the vendor was able to respond to all of the requirements set out in the RFP through its white-label offering, while addressing the need for integration with the treasury workflow. “We were pleasantly surprised by Kyriba’s response to our RFP. Only knowing the company by name, we spoke with some other corporates who were using Kyriba’s treasury software and the feedback was extremely positive. As such, we chose to run a pilot programme with Kyriba.”
A handful of companies were involved in the pilot, and it went very smoothly so Auchan was soon able to expand its reverse factoring programme. “The programme is currently live across several different countries and Auchan entities, with many different suppliers now onboard. On the whole, our suppliers are very pleased with the programme – we can see that from the level of uptake and the fact that once they are live with one Auchan entity, they are asking to go live with others. The platform gives them a single window on their transactions with the entire group. It also gives them a lot of flexibility – they can ask for payment manually or automatically, specifying their requested payment date. They also know exactly how much to expect, which helps them with their cash flow forecasting,” he notes.
Auchan chose to work with multiple banks to provide the financing for its supplier finance programme and this provides an extra level of flexibility for suppliers. “We arranged it so that the suppliers can access funds at a very reasonable rate – and through their bank of choice.”
It is precisely this flexibility and transparency that Crouzet believes has made the programme such a success. “Nothing is imposed on our suppliers. They are free to use the programme if they wish, or to leave it if they wish. What you see is what you get – there is no hidden agenda. For me, this is vital to make a real success of reverse factoring.”
Another key success factor, he believes, is the intuitive and user-friendly supplier portal, which Auchan has worked with Kyriba to enhance. “Financial software is often over-complicated. We wanted something very simple, so that no specific training would be required to use it. Not only have we achieved this easy-to-use functionality – suppliers can request payment in just two clicks – but it looks great too,” Crouzet explains. The supplier portal is also available 24/7.
For other companies thinking about implementing a supplier finance programme, Crouzet has the following advice: “Don’t forget the legal side of things. This can be extremely complicated and it’s very important to get it right, so make sure you allocate sufficient time and resources to that. Marketing the benefits of reverse factoring to suppliers is also key – if you make the business case clear to suppliers, this will help to speed up the onboarding process. However, I must re-emphasize the importance of not forcing suppliers to join the programme. A fair approach is always best.
ABOUT AUCHAN HOLDING
A privately-held company that combines family and employee shareholders, Auchan Group, now renamed Auchan Holding - is organized into three autonomous companies: Auchan Retail, which brings together all existing food retail formats (hypermarkets, convenience store and e-commerce), Immochan and One Banque Accord.
Auchan Holding bears the name of its historical hypermarket business, launched in 1961 by Gérard Mulliez. Today, it is a federation of responsible and sustainably prosperous companies, developing around a shared mission: “To improve the purchasing power and the quality of life of the greatest number of customers, with responsible, professional, committed and respected employees.” This mission is based on three fundamental values: trust, sharing and progress.