FAQ’s
How to get more Information?
Q: What is Supply Chain Financing (SCF)?
A: SCF is a financial tool offered by pre-selected, global banks, which
allow P&G’s External Business Partners (EBP’s), i.e. EBPs, to sell
their P&G receivables to the SCF bank, at an attractive rate that
leverages P&G’s strong credit rating.
Banks Available by Region
Q: How is the discount rate determined?
A: It is based on LIBOR plus the bank spread, which varies by country
& currency. The spread is based on P&G’s credit rating and not the
EBPs. Please contact the bank(s) for specific information.
Q: Are all countries and currencies included in the program?
A: The overwhelming majority of countries and currencies are
included, but not all. Please contact the banks in your region to
confirm where they can offer SCF
Q: Does my company have to do SCF for 100% of
the receivables?
A: When you sign up, the SCF bank will process all of your P&G
payments for the entity that you enroll in the program, However,
you have the choice to discount some or all of your receivables at
any given time.
Q: Are there other costs associated with the SCF program
besides the discount rate (i.e. IT infrastructure, hidden bank
fees, etc.)
A: No, there are no additional costs. Your company gets paid via a
web-based portal and there are no other banking fees
1) If your Headquarter Location is one of the below regions, these banks
can provide you a global solution based on their footprint
2) Regardless of your Headquarter location, if you sell to a P&G Legal
entity in these regions, these banks can provide you with the solution
for this buying region
Americas: Citi and JPMorgan
Europe/Middle East/Africa: Citi and Deutsche Bank (DB)
Asia (excluding China, HK, Malaysia, Thailand): Citi and Deutsche Bank (DB)
China, HK, Malaysia, Thailand: Citi and JPMorgan
P&G’s Supply Chain
Financing Program
Overview
Please use the links below to access more information/contacts
from each bank available (in alphabetical order):
Citi: supplierfinance.citi.com/PG
Deutsche Bank:
http://www.gtb.db.com/content/en/supplier_finance_pg.html
JPMorgan: https://www.jpmorgan.com/scfprogram
Username: Jpmsupplier
Password: Jpm1234
Q: What is the lead time for enrollment in SCF once I decide to
move forward?
A: The overall lead time will certainly depend on lead time for
reaching agreement on the commercial terms of the receivable
purchases agreement with the bank(s) chosen. Once such
agreement has been reached, the implementation will take
approximately 30 days.
Q: Do I have to change from my current banking relationship
to the SCF bank?
A: No, you can continue to have your other normal transactions with
other banks.
You will have to terminate any agreements that give another
bank claims over P&G receivables, such as other factoring
agreements.
Q: What do EBPs need to do to participate?
A: EBPs will need to execute a EBP agreement with the bank as well
as provide basic set up information. Depending on their country
of jurisdiction, they may also need to provide documentation on
their authorized signer. Please contact the bank(s) for specific
participation requirements.
Q: Does P&G receive any benefit if the EBP signs up to SCF?
A: No, P&G does not receive any benefit if a EBP signs up to SCF.
P&G invested in the SCF program exclusively to provide low cost
access to cash for our EBPs.
Confidential
How does the SCF Process Work?
• P&G’s Whiteboard Video: “What is SCF?”
Invoice Receipt Date
• How is the SCF Discount Charge Calculated?
What are the Benefits to Our EBP’s?
• SCF is attractively priced (see example)
(sample calculation; actual rates might differ)
Sends Invoice
Payment
Days Left in Term
Discount
X Annual Rate X
=
Amount
360
Charge
EBP
(Libor + Bank spread)
SCF BANK
$100 X 1.3% X
Invoice Readiness Date
(0.30% + 1%)
Sends Approved
Payment Instructions
75-15*
360
=
0.21%
$0.21
EBP
Email Notification of
Approved Invoices
SCF BANK
• EBPs and P&G will continue using existing process for submitting and
processing invoices
• P&G instructs SCF bank to electronically pay the EBPs on the
due date.
• EBPs is notified of the upcoming payment via email and a webbased system
~ +1 Day
Key Assumptions:
75 Day Payment Terms
15 Day Approved Invoice (From date of receipt of correct
invoice by P&G)
Key Point:
The annual rate will likely be significantly lower
than your company’s WACC! (Weighted Average
Cost of Capital)
EBP
Old Terms
New Terms
New Terms
w/SCF
Program
Assumed Invoice Amount
$1,000,000
$1,000,000
$1,000,000
Payment Terms
Net 45 days
Net 75 Days
w/out SCF
Net 75 Days,
w/SCF
Days Sales Outstanding
45 days
75 days
15 days
Days to Invoice Approval
15
15
15
Days Additional Financing
Assumed Cost of Money after
invoice approval (Day 15)*
30
60
60
5.25%
5.25%
Total Cost of Financing
$4,375
$8,750
$2,166
Total Payment Made to EBP
$1,000,000
on day 45
$1,000,000
on day 60
$997,834
on day 15
-30 Days
+60 Days
• What would an example look like?
Sends Funds
(Discounted
Invoice)
SCF BANK
• EBPs has the option to discount the underlying receivables to cash
immediately after invoice approval, and up to the due date.
• EBPs will typically receive funds next business day into your existing
bank account (electronic deposit)
Invoice Due Date
Sends Payment and
Settles Invoice
EBP
Cash Gain vs. Old Terms
SCF BANK
• P&G pays SCF bank on invoice due date
• Invoice due date is determined by the payment term that has
been agreed between P&G and EBP
Savings with SCF Program (vs.
Extended Terms without SCF)
*Estimation only
• SCF provides an early payment option
– Discount spend automatically or choose the level of
discount manually
– Increases Cash Flow, Lowers Receivables, and Lowers
Days Sales Outstanding
• SCF gives access to liquidity and does not increase your
company’s debt (non-recourse AR)
– Does not increase debt on your financial statements
like many other sources of cash generation
– Frees up credit lines to capture additional business
with lenders
– Creates diversification of sources of cash
• SCF allows for better cash flow planning
Note: Annual Rate should be compared to WACC and
not short term debt interest rates!
Sells
Receivables
– Leverages P&G’s strong credit rating
– Likely reduces EBPs WACC (Weighted Average
Cost of Capital)
LIBOR +
Bank Spread %
(0.3% +1% = 1.3%)
$6,584
– Offers visibility of approved payments and
their timing
– Provides remittance information for each payment
– Works over the web – in report format (text or excel)
• SCF can be a great risk mitigation tool
– EBP gets to discount P&G’s receivables during times
of crisis leveraging P&G’s credit rating