GE Capital Solutions: More Than a Finance Solution - Sylvain Girard and Andrew Stafferton
Managing the financial supply chain is becoming increasingly important, but products to increase efficiency and offset risk have been scarce until now. Jim Banks speaks to Sylvain Girard and Andrew Stafferton about GE Capital Solutions Europe’s innovative approach.
Greater efficiency is the way to squeeze more profit from stretched supply chains, but the financial supply chain has seen relatively little innovation to help companies achieve this. Few financial institutions have formulated global finance solutions, though there is obviously a market for them.
Finance needs global coverage and a wider service package to add real value, which is what GE Capital Solutions is attempting to provide through Commercial Distribution Finance (CDF) – an innovative, flexible solution to reduce risk and grow.
GLOBAL COMMERCIAL DISTRIBUTION FINANCE SOLUTIONS
CDF is built on an understanding of customers’ businesses from many angles, including cash management, marketing, product development and risk analysis. The online COMS system speeds information flow from suppliers to vendors to distributors to resellers to end-users.
Such a solution can reduce sales outstanding with early payment and cut levels of bad debt. Additional information and greater predictability can improve product cycle management and potentially lower product costs, while top-line sales growth can improve net income.
Sylvain Girard, CFO of GE Capital Solutions Europe, says: ‘CDF provides pure financing, underwriting dealers and stock auditing. We currently manage $23 billion in assets in Europe. Through our network we provide a consistent solution globally.’
With financing to help customers acquire fixed assets and run their businesses, GE Capital Solutions has expertise in equipment financing and fleet services. It has an extensive global network and experience in many industries, including construction, transportation, automotive, agriculture, IT, leisure products and telecommunications.
Andrew Stafferton, CDF marketing leader for GE Capital Solutions Europe, explains: ‘CDF is a financial mechanism that allows manufacturers to use their distribution channel. Traditional stock financing is part of a bigger solution. It can improve cash flow, as a product is financed as soon as it leaves our customer’s premises.
‘It adds liquidity to the network, enables clients to get discounts from manufacturers, promotes sales growth and there is risk transfer that improves the balance sheet. Basically, we manage the credit risk. It goes beyond financing. We act as a triparty management service between dealers and suppliers. We become an integral part of a manufacturer’s business.’
This closer relationship brings other benefits. Better information flows enable all parts of the supply chain to have greater product visibility through the entire channel until the final sale. Manufacturers can see how long a product sits at various stages and locations, which could lead to strategy adjustments and, ultimately, cost savings. Additional benefits for manufacturers are passed to dealers, and on through the supply chain.
Girard says: ‘We get to know a manufacturer’s business and its dealer network, which allows us to talk about wing-to-wing services. CDF finances sales to dealers, but it can go beyond that. For example, if a product is sold-to-lease, our equipment finance expertise comes in, or we can do retail finance. Our offering is so much broader than anything you can compare us to.’
A keen understanding of the needs of specific industries is important, as GE Capital Solutions can, for instance, change terms or credit facilities to reflect industry cycles.
Belief in the potential benefits is evident from the growing uptake of the CDF service. Stafferton adds: ‘There is more awareness of this innovative financing mechanism among CFOs. This year, volume is growing 40% and we have financed 700,000 products. Manufacturers can get similar services locally, but no one can do what we do over a breadth of geographies and industries.’
If they are not already, manufacturers will soon be in dire need of far-reaching financing solutions such as CDF. Justifiably, GE Capital Solutions expects word of its service to spread rapidly.