Working Capital Innovation Award: Robust International, Orbian and Evolution Credit Partners

The Working Capital Innovation Award goes to a trio of companies – Robust International, Orbian and Evolution Credit Partners – for a unique collaboration that enabled a buyer to support its suppliers with supply chain finance (SCF) via a virtual payment card, despite not having the investment grade credit rating typically required.

The deal saw Evolution, which offers trade credit protection on accounts receivable from higher-yield buyers, partner with SCF provider Orbian to extend SCF to the suppliers of Robust, a mid-sized trader of niche agricultural commodities that sources from smallholder farmers and local agents across Africa and sells mostly to buyers in Asia.

Extending SCF to under-served supply chains

Judges described the programme as “genuinely groundbreaking” and commended the firms for exploring new ways to offer affordable working capital to an under-served segment of global supply chains.

SCF in its current form has generated enormous benefits over the past 25 years for suppliers that are typically smaller and financially weaker than the firms they sell to. The working capital and liquidity boost they enjoy from piggybacking on the typically higher credit rating of their buyers can help them grow their businesses and buffer them from the worst of economic downturns.

However, suppliers that sell to companies that do not have top credit ratings have largely missed out. Over 95% of SCF activity globally occurs within programmes that are anchored by a buyer with a credit rating that is either investment grade or close to it.

When Evolution and Orbian teamed up in 2022, they set themselves the challenge of changing this. Their aim was to reach what they describe as the “vast, submerged iceberg of corporate finance” and deliver “a long-overdue paradigm shift in SCF.”

Robust shared their vision but also had more pragmatic motivations and objectives. It wanted to access attractively priced liquidity to boost the working capital of itself and its supplier base. It needed supply of this liquidity to be reliable and recurring. And it wanted the platform through which the SCF flowed to be operationally efficient and easy to use.

Rapid rollout and concrete benefits

The programme has moved rapidly from pilot to full implementation, and the results so far have satisfied on all counts. Over $80 million was financed during the first seven months of 2023 on better terms than conventional finance would have offered. And suppliers that previously had no way of accessing SCF and its myriad benefits have been able to reduce their days sales outstanding (DSO) and eliminate buyer credit risk. This has given them confidence in the long-term resilience of the programme.

Orbian’s proprietary Virtual Payment Card offering has also made the programme easier to implement. Robust says both its suppliers and itself have found the technology simple to use. “The innovation lies in how this jigsaw fits together,” said Mike Hewitt, CEO of Working Capital Forum. “It’s a wonderful example of what can be achieved when companies join forces to tackle old problems with cutting-edge technologies and fresh approaches.”

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