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C2FO: Creating Seamless Cash Flow

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Stewart Stanton III, Managing Director

Working capital of a company is much like the engine oil of a motor car. A careful monitoring and a smooth f low of this financial aspect is imperative to keep a business af loat. Most of the time, the challenge for a company—big or small—is to maintain stable liquid cash. Usually, a company’s customers take 90 days to make their payments, which often causes a shortage of the cash ‘engine oil’ for companies. As a result, companies have to turn to banks to access their line of credit or sell their account receivables. Sandy Kemper, a banker with a successful career behind him, discovered a similar situation in the financial credit system while leading one of his own businesses. At this juncture, to solve the problem for his business and many other companies, Kemper came up with a simple yet revolutionary idea: to turn account receivables (AR) into cash f low on-demand and account payables (AP) into income opportunities. Soon, in 2008, Kemper established C2FO, a collaborative cash f low optimization system between an enterprise, supplier, and the customers of the enterprise. Today, C2FO helps enterprises and suppliers of any scale—be it a Fortune 500 company or a small startup—to gain complete control over their working capital.

For smaller businesses, the backbone of any market, C2FO has been a boon. “C2FO is a simple and transparent technology available for such businesses to access their receivables, on-demand, exclusively at a price which suits their cost of capital,” says Stewart Stanton III, managing director at C2FO. Instead of waiting 90 days to receive their cash, for example, C2FO allows businesses to request early payments from customers in exchange for discounted invoices to convert their AR into immediate cash f low. By operating on this model, C2FO relieves the monetary and KPI pressures of companies by providing a debt-free working capital solution. It creates a closed knit transaction platform for suppliers, and customers, without the interference of any bank or other financial entity.

C2FO’s platform can benefit both enterprises as well as suppliers. While suppliers benefit from demanding early invoice payments at a preferred rate, enterprises can use C2FO to generate better returns on short-term investments and improve margins, EPS, and EBITDA. The platform can be easily integrated into the ERP system of an organization in no time and accessed by signing up with an online account.

C2FO is a simple and transparent technology available for such businesses to access their receivables, on-demand, exclusively at a price which suits their cost of capital

With hundreds of algorithms running in the background, suppliers suggest a discounted rate and C2FO technology connects those discount offers with the desired target yield of their customers. Because of this real-time price valuation, discount rates at different thresholds, timetables and invoice sizes can be approved for early payment; contrary to current early payment solutions that only offer static, non-negotiable pricing.

This discounting system of C2FO is purely market based and f lexible. Companies using C2FO to pay suppliers early have observed a growth of 600 basis points in earning incremental than their other short-term investment options. Some of the direct benefits for companies using C2FO also include maximization of Earnings before Taxation, Depreciation, and Amortization (EBITDA) and preservation of healthy Days Payable Outstanding (DPO) ratio. Another striking feature that C2FO brings to the fore is its ability to capture any change in the dynamic cost of working capital round the fiscal year and provide insights for attaining adequacy of reporting metrics and cash f low for a company.

To further substantiate the robust functionalities of C2FO, Stanton III cites a case study. A global consumer packaged goods (CPG) company had found its cash distribution in contrasting numbers across various international markets. While their business in Europe faced extending invoice payment terms to gain better short-term cash position, their Asian business was f lush with cash and earning little return. And repatriation from the cash-rich market to the cash-poor market would incur a substantial tax liability, thus reducing benefits in both regions. C2FO teamed up with the treasury and the procurement team of the CPG company and provided a four-part cross-regional working capital management strategy to help them gain greater financial stability and at the same time increase their profit margins. This CPG company’s supply chain also benefited from real-time access to cash f low through the offering.

Such success stories are a testimony to C2FO’s farsightedness in improving the working capital of a business. Today, C2FO has offices across North America, Europe, India, Australia, Singapore, and all of greater China, and caters to various industry verticals from retail to manufacturing, and oil and petroleum. “In the future, we wish to see C2FO as the primary funding source for businesses across the globe because of the seamless nature of how we connect businesses to deliver working improvement,” says Stanton III, on a concluding note.

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Company
C2FO

Headquarters
Leawood, KS

Management
Stewart Stanton III, Managing Director

Description
C2FO is a simple and transparent technology available for businesses to access their receivables on-demand. Instead of waiting for payments, C2FO allows any business to request early payments from its customers in exchange for discounted invoices to convert their AR into immediate cash flow. By operating on this model, C2FO relieves the monetary and KPI pressures of companies by providing a debt-free working capital solution. It creates a closed knit transaction platform for suppliers, and customers, without the interference of any bank or other financial entity