Clx Presentation Short Version Clx Eng May 2010

Confidential Information - Corporate LinX SAS

Dematerialised & collaborative Supply Chain Finance solutions

May 2010

Fabien Jacquot

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1 – Presentation CLX

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An introduction to CLX

• CLX is an independent French organisation (SAS) with a UK presence,

• Created in 2008, with the objectives to:

– assist Corporations reduce their operational costs, whilst optimizing their Working Capital performance,

– Provide solutions and opportunities to financial organisations.

• CLX can address International organisations in bringing functional & financial expertise as well as technical competence to build cost effective programmes,

• CLX is providing a unique expertise mixing dematerialised Purchase to Pay (PtoP) transactions and the instrumentation of financial initiatives,

• CLX has been spun off from Bottomline Technologies (www.bottomline.co.uk) and if required, can utilise their resources in several regions,

• CLX markets its own technical solutions and distributes complementary solutions when required,

• A proprietary transactional Portal solution with broad functionalities enabling :

– the management of the whole ‘PtoP’ cycle,

– interfaces with other systems,

– Multi-debtor, multi-banks solutions

• CLX is collaborating with several financial organisations in the field of SCF

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Our positioning

� Link up all parties allowing for the financing of SupplyChain transactions (not as an intermediary)

FournisseurFournisseur BuyerBuyer

Financier(sFinancier(s))SupplierSupplier

SupplierSupplier

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2 – Context and constraints

in Supply Chains

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Current situation –> Buyer organisations

• Increasing requirement to improve financial performance

• Improve cash flow management

• Reduce payment terms

• Enhance purchasing terms

• More requests for early payments emanating from suppliers

• Growth in transaction volume to be handled with impact on accounts payable

• Long internal validation cycle for supplier invoices

• Lack of early visibility on accruals

• Rare possibilities to enjoy proposed suppliers’ discounts

• Conflictual relationships with supplier

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Current situation –> Supplier’s organisation

• Uneasy and expensive access to short term credit

• Requirement/urgency to enhance financial performance

• Costly management of account receivable

• Increase in overdue invoice payments

• Challenging situation with own suppliers

• Greater number of suppliers’ bankruptcies

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Current situations in the Supply Chain - Conclusion

• Conflictual relationships between suppliers and buyers; each protecting their own financial situation

• Requirements for rapid improvements

• Legal enforcement of reduced payment terms in Europe

• Suppliers: expensive management of the receivables and frequent late payments

• Buyers: late visibility on accruals and increased penalty conditions for late payments

• Challenging access to easy and inexpensive credit terms from banks

• Increasing number of suppliers bankruptcies impacting buyers organisation (manufacturing, retail, etc)

• Solutions need to benefit all parties involved in PtoP transactions

=> increase in the number of Reverse Factoring or SCF initiatives

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3 –Options to run

Reverse Factoring/SCF

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Definitions

Reverse Factoring:

• Settle debt from suppliers against discounts on invoice value. As opposed to forward factoring, financial terms are based on buyers credit terms. Buyers settles with financiers on invoice due date.

Supply Chain Finance (SCF):

• Financing of the Supply Chain transactions allowing suppliers todemand early payment for validated invoices or other collateral.The Buyer is also implicated as it settles invoices directly to the Financier in due time (or agreed prolonged due time between Buyer and Financier).

Note:

• Through these 2 approaches, besides improved supplier relationships, the Buyer can enjoy either discount on invoice value, kick back (cash) payments from financial partners or extend its payment time with financiers.

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What is attractive about Reverse Factoring/SCF?

For Buyer organisations, several options are available with varied benefits for all participants.

• Reduce debt from suppliers:� Enjoy discount as currently offered,� Propose discount to suppliers.

• (Re-)negotiate credit terms with suppliers,• (Re-)negotiate purchasing terms against early payment option,• Respond to increasing demands for early payment and improve

overall relationship in the Supply Chain,• Manage recent legal constraints (Europe),• Manage cash flow with the choice between early payment or using

financial partners with potential profit sharing,• Provide an additional instrument for ‘negotiation’ to the

procurement team.

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How do these schemes work?

With 2 or 3 participants: 2 combinable schemes

• R.F. between 2 parties =Buyer and its suppliers are facilitating early payment against discount on invoice value– Buyer manages and enjoys discounts directly by using its own working

capital,– Supplier is being paid early by the Buyer against a discount on the

value of its invoice.• R.F. between 3 parties =

Buyer involves financial partner(s) to manage supplier financing in using credit terms based on its own credit rating: – Supplier enjoys better credit terms as risk has been reduced for

financiers, risk being based on Buyer’s credit rating,– Buyer settles invoices to the Financier on due date (or later),– Buyer can enjoy kick back cash payments from financier(s) part of the

programme.

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Reverse Factoring/SCF with 3 parties

Note : this is not an exhaustive representationof all transactions but provides an overview

on how such programmes can beinstrumented via a centralised & personalised hub

1 Information received from

ERP/e-procurement solution

PO delivery

2

1 -

Su

pp

lie

r3

-F

ina

nc

ier

3

Invoicing

7Info delivered into ERP

Information received into ERP

8Disputes-validation

statuts – Payment date

9

Early settlement

PO aknowledgment- OK

Payment on due date

11

2- Buyer

4

5

Request or offer

for early payment

6

ERP updates

to modify payee info 10

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Modules of the transactional portal

e-PO:

Receive from

ERP

Transmission

to vendor

Acknowledge

ment

OK

Notified

Rejection

e-invoice:

Creation

Control

Reject

Send

Acknowledge

ment

Dispute

management

Credit or debit

note

Early

payment/

discount:

Direct

management of

the early

payment vs

discount

Remittance

Advice

Financing:

Management via

financial

partners

Proposed

financing terms

OK

Notified

Rejection

Choice in

payment date

Remittance

Advice

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Why use several financial partner(s)?

• Based on the Buyer organisation’s own objectives, using several financial partners can provide :– Competitive financial proposals, – Diversity and size in credit lines provided,– Flexibility in the management of the programme,– Catering for a broader supplier base (geography, currency, vertical, etc).

• Financial partners outside existing banking relationships can present multiple opportunities,

• Participation from financial partners is managed via the unique Portal enabling greater visibility and control over the programme,

• Corporate LinX (not as an intermediary) can facilitate the introduction with financial organisations managing such programmes and offering competitive conditions & credit terms

• Several methods can ensure competitiveness and transparency in financial offerings for the benefit of suppliers.

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4 –Principles of using a

transactional Portal

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Benefits of using a transactional Portal?

To manage such complex initiatives requires a technical solution in the way of a transactional and centralised exchange Portal

• All transactions of BU’s involved in the programme managed via a unique Portal

• Recuperation of transactions/information from existing internal tools (ERP, e-proc, EDI, e-invoicing, Supplier Intranet, etc)

• Central point for all European (& other regions) suppliers• Early visibility on accruals• Management toll (discounts managed directly or financing via financiers)

• Choice in usage & business models (license mode ou SaaS mode)

• Modular implementation (PO’s, invoicing, early payment, etc)

• Programme managed by Buyer organisation • Reporting et centralised archiving for all transactions• Portal adaptable to Buyer’s graphical guidelines• Creation of a supplier network • Management of several financial partners via a unique Portal

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What is the Portal’s role?

The transactional and collaborative Portal manages:

• A tripartite relationship between Suppliers-Buyer-Financiers

• All dematerialised transactions and audit trails

• Respective visibility down to unitary transaction level => shared transaction status

• Format conversion between different data formats (in & out)

• Information recuperation from Buyer (PO, etc) and from suppliers(Invoice, etc)

• Provide updated transactional data once processes have been completed=> Buyer, Suppliers, Financiers

• Requests for early payments =>Suppliers

• Discount or Financial terms => Buyer, Financiers

• Adaptation to Corporate Graphic identity=> Buyer’s Corporate compliance

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5 –CLX’sproposition

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CLX’s proposition

• If technology is pivotal in running Reverse Factoring/SCF initiatives, expertise is also required to build and run successful programmes.

• Corporate LinX is proposing 4 key components :

1. Specific expertise to evaluate and build each programme on behalf of its client,

2. Select appropriate financial partners to participate in the programme based on specific client objectives,

3. Provide its own CLeX Portal technology to run the programme between all participants,

4. Assist in rolling out the initiative to key suppliers.

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CLX’s proposition

• Initial assessment of current internal situation with Buyer’s organisation allows to create programme with ROI => Initial Statement of Work

• Determine most appropriate solution and the path to attain objectives including technical interface to ERP=> Documented functional & technical specifications

• Select most appropriate technical solution(s) and business model=> SaaS mode ie subscription model or License mode

• Choose financial partners based on their offeringsby way of a Request for Proposal=> Supply Chain Finance, Reverse Factoring

• Programme launch with selected supplier communities with pre-agreed onboading objectives=> Supplier roll out phase

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Proposed phases

Assistance in rolling out the programme to suppliers (optional service)

Project team documented review

Roll out of the programme to a larger supplier group and/or new BU’s

3Contract for phase 2 et 3

Joint review of the results versus set objectives for

pilot phase

Pilote phase with limited number of participants in order to assess initial results

vs objectives2

TBD (external firm)

External firm documented recommendation

Legal validation of the programme and contractual architecture

Evaluation of the technical costs and solution customisation

Introduction to selected Commercial Finance organisations with expertise in Supply Chain

Finance programmes

Functional/technical specifications for participating commercial finance

organisations

Documented of the most adapted solution including interface with ERP and other technical solutions (procurement, EDI)

Initial order for Statement of Work only

for phase 1(no required commitment

for other phases)

Technical & functional specification document

+request for proposal with Commercial Finance

Organisations

Evaluation phase & objectives

1

CommitmentDelivrablesObjectivesPhases

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Initial phase - Pilot

• Corporate LinX is proposing to test such financial initiative by way of a 6 month Pilot Phase:

– Test the CLeX Portal utilised in a SaaS mode,

– Rapid Pilot implementation with 2 weeks work to set up Portal in Buyer’s mode,

– Small technical implementation for the Buyer’s organisation,

– Limited number of Suppliers with no technical work required for them,

– Low costs for the Pilot phase,

– On review of the jointly agreed objectives, possible extension to production phase and roll out to a greater number of suppliers

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2 options beyond the Pilot Phase

Long term commitment can be made out of 2 options:

1. Continue with the SaaS mode for an agreed yearly number of transactions:

• Subscription amount based on forecasted transaction volume

• 3 year contractual commitment

2. License mode based on forecasted transaction volume:

– Purchase of a CLeX Portal license

– Implementation within Buyer organisation’s own technical infrastructure

– 18% (per annum) based on license value for technical support, corrective maintenance and product evolutions

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Contacts

• Tel : + 33 1 79 30 17 60,

• Email: contact@corporatelinx.comcontact@corporatelinx.com,

• Address: 43 rue Mauriceau, 92600 Asnières sur Seine, France

• Web site: www.corporatelinx.comwww.corporatelinx.com

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