When a buyer’s working capital and cash flow management objectives conflict with those of their suppliers, it can create tension and increase supply chain liquidity risk. In this session, you will learn how Ariba Supply Chain Finance can deliver working capital and cash flow benefits to both trading partners and, in the process, reduce supply chain liquidity risk.

1. Enrico Camerinelli, Senior Analyst, Aite Group
Cyril Broutin, Business Development Regional Lead, SAP Ariba SAP), EMEA-MEE CoE / June 15, 2016
Supply Chain Finance: Win-Win Working Capital
Benefits for Buyers and Suppliers
Public

2. ©2016 Aite Group LLC
Page 2 Page 2
Latest Trends in Supply Chain Finance
June 2016

3. ©2016 Aite Group LLC
Page 3
Today’s Agenda
• SCF: Market Size
• SCF: Market Ecosystem
• SCF: Issues Still Open
• SCF: Future Trends

4. ©2016 Aite Group LLC
Page 4
Today’s Agenda
• SCF: Market Size
• SCF: Market Ecosystem
• SCF: Issues Still Open
• SCF: Future Trends

5. ©2016 Aite Group LLC
Page 5
An Overview of the SCF Market:
The Complete Supply Chain Finance Portfolio
Source: EBA, 2014

6. ©2016 Aite Group LLC
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Potential RF Market vs. Current RF Programs
Non-investment gradeInvestment grade
Potential RF target
(US$B)
Number of RF current
programs
US$ 176.8 billionUS$ 524.4 billion

7. ©2016 Aite Group LLC
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Today’s Agenda
• SCF: Market Size
• SCF: Market Ecosystem
• SCF: Issues Still Open
• SCF: Future Trends

8. ©2016 Aite Group LLC
Page 8
The SCF Platform New Ecosystem
Fund providers
Adopters
• Large and small
companies
• Financial institutions
• Institutional investors
Originators
• Family offices
• Corporate investment offices
Distributors
• SCF platforms
• P2P platforms
• SME finance
platforms
• Marketplace finance
• Global financial
institutions
• SME finance
platforms

9. ©2016 Aite Group LLC
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SCF Market Segmentation
Number of relationships in the network
Valuedistributedinthenetwork
Selected
Supplier
B2B
Marketplace
Finance
Anchor
Buyer
Selected
Supplier
Fund Providers
Purchase orders/
Unapproved invoices
Selected
Supplier
B2B platform
SME
SME
Investors
Loans
P2P
Platform
SME
Selected
Supplier
SCF
Platform
Anchor
Buyer
Selected
Supplier
Fund Providers
Approved invoices
Selected
Supplier

10. ©2016 Aite Group LLC
Page 10
Today’s Agenda
• SCF: Market Size
• SCF: Market Ecosystem
• SCF: Issues Still Open
• SCF: Future Trends

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What Keeps Bankers Awake at Night
• LACK OF COMMON TERMINOLOGY
– ICC “Standard Definitions for Techniques of Supply Chain Finance”
• SCF PROGRAMS “BUREAUCRACY”
– Banks require frequent credit checks which distract from business and turn SCF programs into an
administrative nightmare
• LENGTHY ONBOARDING PRACTICES
– The level of information among companies about SCF is still low
• LEGAL AND ACCOUNTING TREATMENTS
– Reclassification of trade payables
• THE IMPACT OF TECHNOLOGY
– Funding decisions on the trading partners’ performance history instead of the buyers’ or the
suppliers’ credit
• NEW ENTRANTS
– Exchange purchase orders and invoices, and accelerate cash transfers using innovative technology

12. ©2016 Aite Group LLC
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Today’s Agenda
• SCF: Market Size
• SCF: Market Ecosystem
• SCF: Issues Still Open
• SCF: Future Trends

13. ©2016 Aite Group LLC
Page 13
The Supply Chain Bank
• A supply chain bank (SCB) is a financial institution that aims to provide financial
support to groups of companies that belong to a common supply chain
• The risk will be distributed across the group and will be transferred from the
"anchor" to all participating trading companies
• Operational performance of supply chain constituents will represent the
"collateral" for SCBs

14. ©2016 Aite Group LLC
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The Supply Chain Bank: Examples

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The Supply Chain Bank: Examples

16. Cyril Broutin, Business Development Regional Lead, SAP Ariba SAP), EMEA-MEE CoE
Supply Chain Finance: Win-Win Working Capital
Benefits for Buyers and Suppliers
Public

17. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 17Public
Important information
This information reflects the status of SAP Ariba solution planning as of June 2016. All such
information is the Confidential Information of SAP Ariba (per the contract between our companies),
and must not be further disclosed, as stated in the confidentiality clause of that contract. This
presentation contains only intended guidance and is not binding upon SAP Ariba to any particular
course of business, product strategy, and/or development. Its content is subject to change without
notice. SAP Ariba assumes no responsibility for errors or omissions in this document. SAP Ariba
shall have no liability for damages of any kind including without limitation direct, special, indirect,
or consequential damages that may result from the use of these materials.

18. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 18Public
Agenda
 Context
 Digital Agenda for SAP:
Upmost Capabilities Combined
 Ariba Strategic Payables Bundle –
The Path to Success
 Beyond Supply Chain Finance (SCF):
Big Data Coupled with a Complete Ecosystem
© 2016 SAP SE or an SAP affiliate company. All rights reserved. 18Public

19. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 19Public
Heading toward greater digitalization
0%
4%
8%
Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15
Revenue growth stalls…
US Europe
Economic uncertainty is a top concern in all regions –
U.S., Europe, Latin America, and Asia.
“… CFOs’ economic anxiety
is likely to be driven by the
expected changes in central
bank interest rates, Chinese
currency valuations, falling
oil prices, and geopolitical
instability in the Middle East,
European Union, and
elsewhere …”
Finance and treasury execs see a clear need for a more digital and technologically sophisticated
finance function that communicates and collaborates effectively.
Source: © CFO Publishing 2015
-8%
-4%
0%
4%
8%
12%
Q1 '13Q2 '13Q3 '13Q4 '13Q1 '14Q2 '14Q3 '14Q4 '14Q1 '15Q2 '15
Cash reserves under pressure
US Europe

20. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 20Public
Finance and treasury in a volatile world
Maintain global regulatory compliance and controls of
accounting and tax standards, across currencies,
languages, and industries
Engage with the business to jointly drive value, based
on real-time analysis of financial and operational
business scenarios
Optimize finance processes for efficient and
collaborative relationships with customers, suppliers,
banks, and government authorities
Business
partnership
Operations
Compliance

21. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 21Public
SAP Ariba solutions –
A core component of our global digital agenda
Security
SAP HANA platform
Digital Core
Business
networks
Customer
experience
Workforce
engagement
Internet of Things
and Big Data
 The entire value chain is
digitized, including the digital
core that serves as the
foundation for business innovation
and optimization.
 The digital enterprise
interconnects all aspects of the
value chain to drive and
anticipate business outcomes
in real time.
 Enterprises across industries can
lead the digital transformation by
completely reimagining
business models, business
processes, and work.

22. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 22Public
SAP Ariba solutions – Networked business collaboration
Source and contract Request and buy Invoice and pay
Indirect – non-merchandise
Travel and expenses
Labor and services
Direct – merchandise
End to end
 Enables source-to-pay integration
 Aligns procurement and finance
 Provides a one-stop shop for sellers
 Lowers IT costs Networked collaboration
 Connect to a global community of
trading partners
 Discover, connect, collaborate, and
gain insights
 Engage across a wide range of
interactions
Comprehensive
 Is not “one size fits all”
 Offers comprehensive capabilities
 Covers 100% of your spend and
supply base
Buyers Suppliers

23. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 23Public
Payment
terms
Discounts
Invoice
automation
SAP Ariba solutions – New capabilities to monetize trading
collaboration
Ariba Network
Over $1 trillion in
commerce
>2 million companies
worldwide
>108 million business
documents
More than 76% of the
Global 2000 use the
Ariba Network
Over $500 million
investment by SAP into the
Ariba Network
Funders
SuppliersBuyers
Optimize DSO and A/R
management with early
payment or financing
options (dynamic discount
and SCF)
Reduce working capital,
increase free cash flow and
earnings before interest,
taxes, depreciation, and
amortization (EBITDA), and
drive additional revenue
Customer value
Extend days payments
outstanding (DPO), unlocking
millions in free cash flow
Increase EBITDA with
incremental supplier
discounts
Strengthen and tighten
relationships with strategic
suppliers
Reduce risk with outsourced
supplier bank account info
and e-payments
Increase A/P management
efficiency providing visibility
through vendor portal and
outsourced payment services
Payment
processors
Mitigate liquidity risks:
true multi-funder options
Low rate funding
Optimize the payment
process: electronic payments
(SEPA compliant)

24. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 24Public
1. Pay right: Connect payment to procure to pay
(P2P) to drive adoption and capture value for
procurement
2. Pay early: Leverage approved payables to help
treasury earn dynamic discount savings, optimize
working capital management, and free up
cash flow
3. Pay well: Remove risk and provide value to
suppliers with certain, secure, and simple
business-to-business (B2B) payments.
Ariba Strategic Payables – Combined capabilities for high value
Working capital
(DPO and discounts)
Security and
simplicity
(B2B payments)
Acceleration
(Process
automation)
Combined on a single platform, technology, risk management, resource, and experience enable
payables to become a strategic asset.

25. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 25Public
Support all invoices and funding scenarios, complementing SAP Ariba solutions
 Electronic payments to
suppliers
 Bank account data
stored externally
 Supplier self
management of bank
account data
 Rich remittance info to
match invoices with
payments
 Ability to track and trace
status
Working capital management advisory and supplier services
Buyer
Sourcing,
procurement,
and invoicing
…Pay rightBuy right...
Funded by
Operated on
and with
Banks and capital markets
AribaPay
Ariba Strategic Payables – A comprehensive set of payables
solutions
(Payment terms standardization, rationalization, extension, and supplier outreach)
Direct spend
Large to midsize suppliers
Indirect spend
Small and midsize suppliers
 Supplier sells approved invoices to
funder at a discount rate based on
buyer’s credit worthiness
 Supplier accepts to be paid by
buyer at prorated discount prior
to due date
Ariba DiscountPro
Ariba Supply Chain Finance
(planned, July 2016)

26. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 26Public
Ariba Strategic Payables: “Invoices as strategic assets”
€ €
Low
High
Free cash flow
Extension of
payment terms
Net income
Ability to earn early
pay discounts
Risk
management
Scalable and secure
payment
Lower DSO
Faster collections
Reduced costs,
no debt
Low cost, on-demand
financing
Trust and
adoption
Payment visibility and
remittance
Competitive advantage
for both
Better collaboration
Financialvalue
Buyer Supplier

27. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 27Public
Ariba Strategic Payables – A single solution for multiple goals
and needs
Buyer goals Supplier needs
Increase cash-flow (DPO)
Low
High
Financialvalue
Low
High
Financialvalue
Earn discounts
Make secure electronic
payments
Provide payment status and
approved invoice
Low-cost financing
and fewer DSO
Early payment
Payment remittance details
Visibility to payment status
and approved invoice
Ariba Supply Chain
Finance
(planned, July 2016)
AribaPay
(plans for H2
2016)
Ariba
Network
and ERP
adapter
Ariba
DiscountPro

28. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 28Public
What’s the value for treasury?
 Average discount client: up to 24% risk-free return on cash
 Average SCF client: up to $100 million in cash flow
improvement
 Live operation that’s earning value in 3 months
 Banks’ core competency: lending money
Our core competency: technology
 Selecting SAP Ariba solutions is not deselecting a client’s bank
+
 Business as usual for the majority of a large corporation
 IT resource effort: 200 hours
+
High value and speed to benefit
Nominal change management
and IT resources
+
+
Bank

29. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 29Public
3. Preshipment finance
(Such as PO finance or inventory finance)
2. Receivables
finance
1. Supply chain financing
(also known as reverse factoring)
Inefficiencies are still around in the supply chain
Key messages
 Buyers need to bring value to their suppliers all along the supply chain.
 Current alternatives – A/R and PO finance – are either costly or inefficient.
 Ariba Supply Chain Finance is efficient; it is based on approved A/P and constrained by buyer ability to validate
invoices rapidly.
Specific to the supplier-buyer relationship
Supplier-initiated
Buyer-initiated
Bankfunded
Financing time frame per type of financial instrument Risk-to-interest ratio
Medium
High
Low
Inefficient
Risky
Costly
Few eligible
Low cost
100% funded
Inventory
build-up
Invoice
issuing
Invoice
approval
Invoice
payment
PO
reception
Order-to-cash
events
Goods
shipment

30. © 2016 SAP SE or an SAP affiliate company. All rights reserved. 30Public
But the time is right for compelling enhancements
Buyers
Funders
Suppliers
Payment processors
Credit
insurance
Risk
assessment
Business
analytics
Dynamic collectionsFSC-triggered
financing
Real-time decision-
making support
 Predictive behavior
(historical data analytics)
+
 Full visibility of physical
supply chain events
=
 Risk mitigation for all
parties (lowers prices and
improves advanced
amounts)
Big Data

31. Thank you

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