This is part II of a series focused on new technology providers that have entered the space often referred to as Dynamic Discounting within the last 5 years. The ultimate goal of these types of technologies is to optimize working capital and improve cash flow management between trading partners. Part I was on Taulia (click here to read) and today I’m going to focus on another fairly recent entrant – C2FO. Part III will cover the new dynamic discounting capabilities from Tradeshift.
C2FO, formerly known as Pollenware, takes a unique and innovative approach to optimizing working capital for both buyers and their suppliers. C2FO is an online market that allows enterprises to optimize their working capital in a live bid/ask environment. This market provides an efficient solution for suppliers to improve cash flow by accelerating payment of their invoices while giving buyers the ability to reduce their cost of goods via early payment discounts.
The challenge that enterprises typically face with early payment discounting is that when a buyer has cash reserves and wants to pay an invoice early, a supplier may not be willing to take a 2% cut because they don’t have a need for cash and vice versa.
C2FO solves this by enabling a buying organization and its suppliers to gather online for a live ‘cash flow optimization’ event. During this event the buying organization looks to get a certain return on excess cash. Prior to the event, the buying organization identifies and invites suppliers to the event; those that register see their outstanding approved invoices with that buyer. With this information and using the different tools available, the supplier can place early payment offers on invoices of their choice before the market closes (this is a pre-set date determined by the buyer).
Early payment discount offers should ideally be placed before the market closes (i.e., event ends). Because the buyer only has a certain amount of cash available to pay early they will choose the best discount offers from their suppliers. So, in order to improve chances of being awarded early payment, suppliers are able to see the status of their offers and make real-time adjustments during the closing phase of the event. C2FO helps by providing additional information, for example, automatically calculating the annual percentage rate for the suppliers discount offer.
Meanwhile the buyer has already configured their C2FO market approval ranges and thresholds for what offers they can accept in order to get the desired APR. After all offers have been submitted and C2FO has helped to optimize them, an award file is sent to the buyer and supplier that reflects the new payment dates.
C2FO certainly has a promising future, to date, the company has enabled more than $5 billion in early cash flow and created more than $300 million in market capitalization growth for its clients. On July 23, 2013, C2FO announced the closing of its $18 million in growth funding led by Mithril, a global technology investment firm based in San Francisco. Mithril was joined by existing investors Union Square Ventures, which led the company’s “B” round, along with Summerhill Venture Partners and OpenAir Equity Partners, which led the company’s “A” round. This brings C2FO’s total funding to approximately $30 million.
