SUPPLY CHAIN FINANCE
Welcome to J.P. Morgan’s Supply Chain Finance On-boarding Resource Center for Suppliers!
Thank you for selecting J.P. Morgan to provide you with an alternate source of liquidity at attractive pricing. You will be able to accelerate payment through an early payment program that discounts invoices at low rates. This solution allows you to reduce your days sales outstanding (DSO) while increasing the predictability of your cash flow. Both buyers and Suppliers can access a secure, automated web-based platform and gain real-time visibility into invoice and payment information.
J.P. Morgan’s Supply Chain Financing program has successfully serviced clients and their suppliers across the globe since 1994. We look forward to working with you.
Benefits for Suppliers:
- Opportunity to sell receivables for cash and reduce DSO
- Option to collect early payment when needed
- Access to low-cost financing outside their bank credit line
- Realization of more reliable cash flows
- Auto or manual discount options allow choice of all or a few invoices
- Streamlined Internet-based reporting
- Mitigates buyer payment risk
- More predictable cash flow
- Additional source of liquidity
The Supplier Calculator should help you understand the potential financial benefits of participating in the J.P. Morgan Supply Chain Finance program. Please note that the following calculator is for illustrative purposes only. Actual rates and results may vary.
- Fill out the BLUE boxes with terms as agreed with the Buyer
- Hit “Run Calculation” button
|Annual Supplier Spend:|
|Buyer Payment Terms With Supplier:|
|Days For Buyer To Approve Invoice:|
|Days Of Financing:|
|What are the benefits to enrolling in the Supply Chain Finance program?||Supply Chain Finance program benefits include early payment, reduced Days Sales Outstanding (DSO), an infusion of working capital and access to an alternate source of financing (liquidity).|
|What has been the feedback from other participants enrolled in the program?||Suppliers who have enrolled find the program financially advantageous, especially where payment is received early so that they have working capital to pay their suppliers and (or) buy raw materials.|
|What documentation do I need to complete for enrollment?||To start the enrollment process, Suppliers need to sign and provide a Supplier Data Form and Incorporation documents. J.P. Morgan will then ask Suppliers to sign a Receivables Purchase Agreement that allows the sale of receivables to J.P. Morgan. If using the web-based platform, an Electronic Services Agreement will also need to be completed as part of the enrollment process. Additional documents may include the Implementation Forms and Lien Waiver Letters.|
|If I decide to enroll in the Supply Chain Finance program, what is the process?||Upon receipt of your completed Supplier Data Form and Articles of Incorporation/Certificate of Formation, J.P. Morgan's Supply Chain Finance Contracts Team will prepare and email the legal documents with any additional forms for your review and execution. Depending on jurisdiction, J.P. Morgan performs a lien search on the Supplier enrolling in the program to ensure that a third party does not already have a lien filed that may include accounts receivables (A/R) as collateral. If a lien has been filed which covers A/R related to the specific Buyer, we require that secured party to execute our Lien Waiver Letter.
J.P. Morgan will set up your organization in the system once the executed documents are received. Upon setup completion, J.P. Morgan will notify you and the Buyer.
|What is the difference between Auto Discount or Manual Discount?||This selection needs to be made in the Receivables Purchase Agreement.
A majority of Suppliers select the Auto Discount option. Auto Discount assures that payment is received as early as possible by allowing Suppliers the convenience of receiving early payment for invoices that your Buyer submits to J.P. Morgan (once approved) without any additional action on your part. If you select Auto Discount, your payment will be sent after J.P. Morgan receives the Confirmed Receivables file from the Buyer. Email notification will be sent to authorized personnel.
Manual Discount requires Suppliers to access the J.P. Morgan web-based platform in order to select and approve individual invoices for which they want to be paid. If the invoices are selected and approved before noon (12:00 p.m.) on a business day, your payment will be sent next business day. If they are selected after noon (12:00 p.m.), your payment will be sent in two (2) business days. Cutoff times may vary depending on the respective region. Please contact your Supplier Enrolment Representative for details.
|I have outstanding liens through other creditors. What does J.P. Morgan do in this case?||J.P. Morgan will initiate a lien search (e.g. Uniform Commercial Code (UCC) in the United States), where applicable for the country, to identify creditors who have secured interests in your accounts receivable. If liens are found, J.P. Morgan prepares a Lien Waiver Letter to your creditor bank requesting their agreement to relinquish security interest only in the Accounts Receivables (A/Rs) due and payable by the Buyer that J.P. Morgan purchases. J.P. Morgan cannot purchase a Supplier's receivables until this Lien Waiver is executed.|
|Do I need to set up an account with J.P. Morgan?||Suppliers do not need to set up an account at J.P. Morgan. J.P. Morgan will send funds to the Supplier's account at their bank via Wire or ACH or other local payment method.|
|Is a J.P. Morgan credit line required to participate?||No credit line is required. The Buyer's favorable credit rating enables Suppliers to take advantage of this low cost financing solution.|
|Do I need to set up an account with J.P. Morgan?||Yes, the Receivables Purchase Agreement can be terminated by either party with five (5) business days written notification. For the Manual Discount option, opting out is as simple as no longer selecting invoices for discount. Required days for written notification may vary depending on the respective region. Please contact your Supplier Enrollment Representative for details.|
|Can you explain how the discount charge is calculated?||
The discount charge is calculated by multiplying the invoice amount by the rate, where the rate includes the spread plus the Funding or Money Market Rate. This number is multiplied by the number of days from the date J.P. Morgan purchases the invoice until the maturity date. This amount is then divided by 360 days, or 365 days for Pound Sterling.
For example, the calculation on a $100,000 invoice would be:
($100,000 (1.75% + .37%) x (60 days - 5 days)
= $323.89 discount fee
|Why do you require a copy of our Incorporation documents/Certificate of Organization?||J.P. Morgan needs to verify the Supplier's exact legal name and country/state of incorporation to fulfill regulatory requirements. In addition, a Supplier may not be a client of J.P. Morgan, this aids in meeting country-specific requirements such as the USA Patriot Act.|
|Are all these documents necessary?||Depending on your choice of Auto or Manual Discount, certain documents can be excluded. If you select Manual Discount, all documentation will need to be executed. If you select Auto Discount, the Agreement for Invoice-Related Electronic Services is not necessary unless you want access to the web-based platform for reporting purposes.|
|Is it okay to email or fax the executed documentation?||No. J.P. Morgan must have the original documentation to implement the program. As an option, you may email or fax the executed documentation to J.P. Morgan for a review of accuracy prior to mailing the originals. Early review provides the convenience of making any necessary corrections to the documents before sending the originals. This will ensure accuracy and save time with the enrollment process.|
|How is payment made to suppliers?||In the United States J.P. Morgan uses ACH to submit payment to suppliers. For international suppliers, J.P. Morgan executes payments via local electronic payment system.|
|What is the timing for us to receive payment after invoicing the Buyer?||Supply Chain Finance payment is made by J.P. Morgan's use of ACH deposits for our U.S. Suppliers and local electronic payment system for our International Suppliers. If you select Auto Discount, payment will be sent to you the next business day after J.P. Morgan receives the Confirmed Receivables file from the Buyer. If you select Manual Discount, payment will be sent to you next day after the invoices are selected and approved, as long as this occurs before noon (12:00 p.m.) local time. If the invoices are selected and approved after noon (12:00 p.m.) local time, payment will be sent to you in two (2) business days. Please note that cut-off time may vary by country.|
|What if there is an invoice dispute, for any reason, and the invoice sits as an unconfirmed receivable?||If the Buyer does not submit an invoice as a confirmed receivable, the invoice is not considered part of the Supply Chain program. As a result, disputes would be between the Buyer and Supplier directly.|
|Is there recourse for the program?||Supplier is not responsible for a Buyer's nonpayment due to credit reasons or other financial inability to pay. There is recourse in the event there is a breach of representation, warranty, covenant or the terms of the Receivables Purchase Agreement.|
|Who can I call with questions about the program?||Once your organization is set up on the J.P. Morgan system, you will be provided with our Customer Service contact information, telephone number and e-mail addresses. This information will be provided to you with a copy of the countersigned contracts. Your Program Manager will also be available for ongoing support or questions.|
Work-Comp Management Services, Inc. has utilized The J.P. Morgan Early Pay system for over 3 years now. The Client that set up this accounts receivable option for its vendors is one of WCMS's largest clients, and being able to access those funds at an earlier date is critical to our cash flow. The enrollment process was very smooth; I am in my 50s and not as tech knowledgeable as many business owners, but I was able to get help whenever I needed it. I personally can easily manage my early pay requests, and the cost is very reasonable (in fact, it's a smaller percentage than most of our clients offer if they have an internal early pay system). The service team knows me by name, and is extremely helpful and pleasant. J.P. Morgan is a critical part of our financial structure, and we look forward to a long term partnership.
- Julie Ott, Owner/Nurse Manager, Work-Comp Management Services
Our business units have had a very favorable experience in working with the J.P. Morgan Supply Chain Finance team over the past two years. J.P. Morgan responds quickly to our service and set-up requests, they turn around payments promptly, and are easy to work with.
- Robert Suszek, Corporate Credit Manager, Parker Hannifin
We have been using the J.P. Morgan Supplier Finance program for two of our businesses since 2010. The set up and operation of the program has worked exactly as advertised and we haven't experienced any issues. This program has improved our cash flow at a very competitive financing rate. I would recommend it to anyone who is considering it.
- David Lauer, CFO, Fabricated Metal Products Co.
We are extremely pleased with every aspect of the J.P. Morgan receivables financing program and strongly recommend it to any business—small or large.
- Warren Eulgen, Founder & CEO, High Velocity Communications Inc.
Covenant Packaging Inc is beyond impressed with J.P. Morgan. The enrollment process could not have gone any smoother or easier and we have experienced nothing but great ease in use of this program. We did contact the Customer Service side just to go over a couple of items and the staff were most impressive with the depth of knowledge and simplicity in answering any and all questions. The benefits of receiving payments in such a timely and efficient manner ensures success for any company—we see this as a win/win for all involved. We highly recommend J.P. Morgan to all businesses considering such a program. Our experience has been nothing but outstanding.
- Diane Freeman, Covenant Packaging