Interactive Model

Acme Plc is an infrastructure business with revenues of £10.8bn and is a rated publically listed business. Last Year third party vendor spend was £7.3bn. Case study background »

Working

  • Vendor spend = £7.3bn
  • Assumed that 50% is transacted
    through Oxygen EPP Programme = £3.65bn

  • Therefore average spend per day = £10m
  • Currently suppliers typically paid on day 45
  • Accelerating payment from day 45 to day 10 would a facility equivalent of 35days of spend @ £10m per day = £350m facility required.
  • Assumption that suppliers will accept an early payment fee of 1% to be paid on day 10 e.g. 35days early, this would generate £36.5m of income
  • Cost of programme assumed to 5% annualised

Outcomes

Liquidity / cash made available to suppliers early
= £350m

Income generated from suppliers at 1%
= £36.5m

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