Objective

This document describes:

• The global process overview

• The vendor master data flow and information that must be updated at the different systems.

• “Supplier Financing Program" Process Flow

• NAM/EMEA

• LAM/APAC

• The procedures and controls implemented

• The different tasks that must performed by different teams/persons along the process.

Supplier Financing context

Payment terms have been significantly worked out over the past years especially for large suppliers

Suppliers do look after cash and are not keen on increasing payment terms without any counter benefit

Cash management (forecast, flexibility, …) is an increasing area of focus for suppliers

Solvay benefits from attractive financing rates on markets, potentially more attractive than suppliers in some cases

The objective is:

• Focus on large suppliers only (~>2/3m€ spend)

• Bring to the table an added value innovative system for both suppliers and Solvay

• Enhance cash management optimisation for both parties

• Enable flexibility and tailoring approach for both parties

Solvay negotiates extended payment terms in exchange of what:

1. Solvay processes received invoices and approves them

2. When invoice approved, supplier can ask for payment before invoice maturity systematically or punctually

3. If so, supplier paid by banking partner upon request & charged at a cost based on LIBOR & Solvay credit standings, for instance, DB proposed fee: 1,48% APR

Solvay pays  banking partner at maturity while continuing to manage PO, reception & invoice workflow

The benefits will be:

• Enhanced supplier relationship management through the provision of innovative added value service to suppliers

• Increased payment terms & enhanced working capital

• No recurring costs for Solvay (“project” resources & systems set up only)

• Flexible on boarding model as Solvay selects suppliers to be integrated and can adapt pricing mechanisms to suppliers

• Structural working capital optimisation rather than end of period short term optimisations

• Able to manage cash efficiently & with flexibility (automatic discounting  or invoice cherry picking discount): conversion of receivables into cash when and if desired

• No service, set-up or unused credit lines fees

• Captures Solvay financial markets attractiveness when relevant

• Represent an alternative supplier  “low cost” funding lever

• At least, on time payment secured

Global Overview

Master data Maintenance

Tanguy Moentack, Nathalie Manirakiza, Flavio Ciampaglia and Thomas Warnotte are in charge of the activation and change of SCF suppliers. All requests must be sent to Nathalie and Flavio with Tanguy in copy for approval before start the activation (Thomas is the leader).

• Currently there are 4 JP Morgan Vendors Created:

  Vendor	Name	City	Country
  2113681	JPMORGAN CHASE BANK NA	NEW YORK	USA
  2823930	J P MORGAN CHASE BANK	LONDON	UNITED KINGDOM
  4009699	JPMORGAN CHASE BANK (CHINA) CO LTD	SHANGHAI	CHINA
  9901018838	BANCO J P MORGAN S A	SAO PAULO	BRAZIL
  4206355	JPMORGAN CHASE BANK NATIONAL ASSOCIATION	MUMBAI	INDIA
  4506050	JP MORGAN CHASE BANK	BANGKOK	THAILAND

  
  

PF1_050

The first step is update the master data of the vendor classifying as a SFP vendor (supplier financing program) using XK02:

PF1_020 and WP1_400

Maintain SFP - SM30 - Z1Y_SFP_SEL_ERP. The company code will be provided by the requester:

Then, the Payment Terms (provided by the requester) have to be update at Company and Purchasing Level (company, purchasing and plant view).

NOTE: NAM/EMEA - Ensure Vendor master data is aligned with PI1

• Company view (using XK02):
  
  
  
• Purchasing view (using XK02): Check the Purchasing Organization where Vendor is currently created using MKVZ or SE16_LFM1

• Plant view: the update needs to be performed for all the Plants linked to the company for all the purchasing organizations linked to the vendor. 
  The plants not linked to the vendors must be linked for the WP1_400 system (only plants for the same country as the company code), and if the payment term provided for SFP is different from the Payment term in Purchasing Orgs..

  The transaction SQ00 (Query areas - Standard Area ; Other user group: ZW_PU ; Query: ZMM-026) will provide you the list of plants by company:

For example a vendor linked only for the PO 3001:

The Plants 0214, 0215, 8058 and 8198 will need to the added or updated.

To add or update you use the transaction XK02:

NOTE: In PF1 we have transversal Purchasing Organizations, where the change will impact other Company Codes. All Porgs. starting with Z***, no change should be done at all levels and Requester will need to be informed, in order to renegotiate the SFP contract to all company codes instead. Example: ZC30 Foc. Packaging. Message to be sent: "This request will impact Purchase Organizations that are shared with other company codes where the Vendor is also created and not included on the initial request. Impacted Purchase Organizations & Company codes: 4290 SOLVAY CHEM (US) 0001 SOLVAY  (SCH) 0270 SOLVAY CHIMICA (IT) (...)

AP, Proviosioning and Materials team 

After the update made at vendors level the ticket needs to be transferred to the Materials team. They will analyse and update active contracts.

Hereafter, the requester is informed and, if not provided in the initial request, ask if:

• Open items must be updated (If the answer is Yes transfer request to AP, and afterward, they should inform SC Payments, we don't need the ticket back)
• Open POs must be updated (if the answer is Yes transfer request to Provisioning stating the Purch Org. and Plants impacted, and afterward, they should inform SC Payments, we don't need the ticket back)

If the answer is YES to both questions, ask Provisioning to transfer the ticket to AP and afterward, they should inform SC Payments, we don't need the ticket back.

Annual Review