Citigroup's Global Transaction Services today announced it is partnering with Syncada from Visa, a B2B financial supply chain network, to provide its clients an accounts payable management solution.
"The Citi-Syncada partnership is an important part of our strategy to deliver "best-in-class" solutions to our clients," said Amol Gupte, North America Treasury and Trade Solutions Head for Global Transaction Services at Citi. "Our award-winning supply chain finance platform and Syncada's market-recognized expertise in this sector adds another dimension to our trade finance and payments products."
Originally developed by US Bank to provide accounts payable functions to the transportation industry, Syncada is a network that enables business-to-business invoicing and payments by leveraging its network of financial institution partners. Further it takes all the paper out of the process, converting all invoices into electronic data and routing it with electronic workflow.
"The processing part drives down cost dramatically for a firm that is receiving invoices," says Kurt Schneiber, Syncada CEO. "On the other side, the supplier gets more transparency as to where the invoice is."
Syncada works by connecting the bank to the invoicing and payments process. Say a supplier enters an invoice and wants to receive payment now, Syncada brings in a financial institution as a financier to provide the payment at a slight discount. At the due date, the buyer pays into the system, the bank takes the money and is paid in full, minus a processing fee.
"Our mandate, our challenge, our opportunity is to provide this service to banks in north America as well as abroad to establish a truly global multibank network of global supply chain management," Schneiber says.
Schneiber describes Syncada as a cloud-based solution. Citi shouldn't need to do much to set up shop. Syncada doesn't compete with the banks, but rather promotes itself as a means to get banks closer to the payments. Syncada makes money through finance fees and the spread off financing invoices.
"From a technology part it’s pretty simple because we’re doing primarily a data exchange story," Schneiber says. "We’re not installing software anywhere. We don’t get in the way of their technology roadmap for themost part."
Schneiber adds that while some vendors offer solutions, and various banks might have developed a proprietary means to process B2B transactions, Syncada brings all the various pieces of the process together.
"Adding Citi to the Syncada network is significant for us," Schneiber said. "As one of the world’s largest financial institutions, Citi has a well-founded reputation for smartly introducing innovative products and operating as a global bank with an operational presence all over the world. Citi’s decision is a validation of our strategy in the financial supply chain market."