Why Financial Management is Necessary to the Digital Supply Chain
In any company, no matter the size or industry, financial management strategies are changing to account for the evolution of digitization and e-commerce. The mounting complexities and expectations that come with the digital age must be factored into brands’ financial strategy, especially as they plan to grow and if they have limited resources.
According to an Intuit survey, the number one regret of small business owners reflecting on the first year of business is that they didn’t spend more time learning about financial management. And while large enterprises may be able to dedicate more resources to financial management, hiring professionals specifically for that purpose — compared to needed self-learning — when it comes to the supply chain, the rapidly evolving digital financial landscape requires the help of an outside expert.
The way a supply chain establishes a footprint is changing — at least compared to the exclusively physical or paper trail logistics that companies used to be able to layout. For both neophyte and veteran brands still doubting the need to outsource supply chain financial management services, here are two quick reasons that will make up their minds:
Global Ease: Tax and Compliance Reporting
E-commerce enables brands to easily and rapidly extend business into new markets and consumer bases across the world — at least it does with the right financial management to follow it up. An e-commerce platform gets brands foot in the door for global markets, but to successfully expand operations internationally is far more complex than simply offering a translated online storefront or currency conversions (though this is important, too and can be streamlined by a supply chain partner). To offer goods globally, brands need to factor in every element from assembly, storage, and shipping to local taxes, tariffs and fees.
No brand enjoys dealing with taxes or calculating what exactly applies to their operations. They likely even less enjoy dealing with the repercussions of not managing these obstacles correctly—from consequent fines to having goods held at the border while they negotiate fees they were unaware of. Rather than risk these run-ins, companies can leverage the vast expertise of a supply chain management partner to remove the burden of complex tax structures from their operations. ModusLink, for example, fully covers VAT, indirect tax models, import/export taxing and reporting, Intrastat reporting and support for regulatory or industry body compliance such as the European Waste Electrical and Electronic Equipment Directive (WEEE).
Accounting Services for B2B and D2C Sales
Sales to business entities can be complex. A supply chain partner can remove the financially cumbersome factors of this workload to optimize selling and meeting customer demands. These corporate finance services can include general ledger, accounts receivable and purchase order management, credit and collections, e-invoicing, revenue recognition support and comprehensive statutory reporting. Digitally experienced partners like ModusLink also software to empower these streamlined initiatives, including a worldwide SAP-based infrastructure that allows for a seamless link to brands’ corporate ERP strategy to let them grow their business with ease and efficiency. Supply chain partners can also function as a merchant of records—meaning financial liability rests on their shoulders. This is a major benefit to brands. The merchant is in full control of payment management and can request varying debit amounts and/or frequencies (e.g., the first month for free or changing payment amounts).
When it comes to selling directly to the consumer, especially on a global level, brands need to optimize the user experience to meet high consumer expectations around online shopping experiences. By using a supply chain partner’s financial platform, brands can gain immediate access to more than 250 global and localized payment options, meaning shoppers can use their preferred payment methods and achieve an easier, simpler experience. This comes with no added risk to the brand, as platforms can deliver risk checks, including tokenization for recurring payments, to protect against fraud and chargebacks. While these capabilities may seem to benefit brands behind the curtain, consumers are equally impressed by seamless financial transactions—resulting in reduced cart abandonment, maximized conversion rate and increased revenue.
The digital supply chain will only continue to bring on bigger opportunities and challenges for brands. Diving into the digital age equipped with the right financial management services will be what sets companies’ digital supply chains apart — delivering business to the four corners of the globe and on consumer screens everywhere.
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