San Francisco-based fintech Taulia is launching a new inventory management product as it seeks new ways to release capital tied up in physical supply chains.
The company historically provides payables and receivables financing, but tells GTR ahead of the launch that expanding into inventory financing “will enable Taulia to provide its global customer base with solutions that cover all three areas of the cash conversion cycle”.
Chief executive Cedric Bru says an estimated US$44tn is “locked in supply chains” at any given moment, telling GTR: “The journey we are on here is to unlock some of that working capital.”
The new business line will be led by Erik Wanberg, who was appointed as head of inventory management in March this year. Wanberg was previously a managing director at Wells Fargo Capital Finance, where he headed up its supply chain finance offering.
Wanberg explains that once a supplier has shipped goods, it can face difficulty and high costs when seeking to obtain finance.
One option is to transfer ownership of the goods to the buyer on a free-on-board (FOB) origin basis, meaning that the buyer would pay costs upfront. “But then the buyer ends up carrying the inventory on the water, and there’s a high cost to doing that,” he tells GTR.
“So the premise is that we can purchase that inventory from the supplier – FOB origin – and hold it. Once it’s delivered, we invoice the buyer. That’s a way to hold the inventory at a lower cost.”
Taulia will use its technology to consolidate different data feeds and document sources into a single dashboard, letting companies using its platform “make an intelligent financing decision”, Wanberg adds.
The expansion of product lines follows a major funding round for Taulia that was completed in July last year, which saw the company raise US$60mn from backers including JP Morgan, Ping An and Saudi Aramco.
Bru says another factor behind the move into inventory finance was the squeeze on working capital and disruption to global supply chains caused by the pandemic.
“During the time of Covid it has been really clear that the management of inventory is even more important than before,” he tells GTR.
“If you go back in time, I think a lot of companies would wish they were able to increase their buffer stock to handle fluctuating demand and address the fact some suppliers could not deliver, or were having trouble manufacturing goods.”
Inventory finance has featured in the spate of commodity trading fraud cases over the past year, including in the collapse of Singapore’s Hin Leong, where financing was allegedly raised against cargo that did not exist or was not still owned by the trading company.
But according to Bru, Taulia can avoid that risk by drawing documents from its network of companies involved in a trade – including logistics partners as well as buyers and suppliers – rather than solely from the party seeking finance.
“To me it is the network that solves the issue of fraud,” he says. “We know that all the different documents are legitimate because we don’t pull them purely from the party that is asking for financing or help with the inventory – we are getting them from the counterparties.”
Alongside the introduction of inventory management, Taulia has also appointed Charles Brough as global head of signature accounts. Brough was previously a director at Greensill prior to its collapse, and has also held roles in trade and receivables finance at HSBC and Bank of Montreal.
He will work on the expansion of Taulia’s inventory management product, as well as in receivables financing.
The expansion follows a cluster of senior hires in recent months. Former HSBC trade head Alexander Mutter was appointed managing director for capital markets in October last year, shortly followed by the hire of New York-based Andy Lee, both as part of efforts to expand Taulia’s pool of funding partners.
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