What was the likely impact of the new payment terms on P&G’s financial statements and its funding needs?
Read the P and G Working Capital Finance
This case introduces supply chain finance (SCF), a modern form of working capital management. What is unique about the case is that it presents both sides of the commercial transaction and shows the inter-relationship between a buyer’s accounts payable and a supplier’s accounts receivable. The case illustrates the mechanics and the economics of supply chain finance, and the role played by the SCF banking partner.
Case study questions
Why did P&G extend its payment terms for suppliers in April 2013?
What was the likely impact of the new payment terms on P&G’s financial statements and its funding needs? The same for Fibria’s financial statements and funding needs?
Why did P&G simultaneously launch the SCF program in April 2013, along with the new payment terms? How does the SCF program work and who benefits from it? Is the SCF financing rate competitive?
Should Fibria continue to use the SCG+F program?