Senior management can set working capital management improvement targets, without any real evidence that is possible to change payment terms, etc. Companies often resort to high level benchmarks that can give an idea of what might be possible, but due to different corporate footprints it can be very difficult compare any two companies WCM’s performance. Some companies commission special studies of the payment terms that are available in a particular industry which give average payment trends in various countries. Nevertheless, they still don't tell managers, “How do my payment terms compare with what is being offered in the market?” Informita think they have the solution.
Informita’s TERMSCHECK solution
Informita collect payment term information on companies in over 184 countries and allow users to compare their customer and supplier terms against that database. This provides a direct comparison against real data that exists on the market. Users learn about the real terms being offered by real companies in their market.
How does TERMSCHECK work?
Users send TERMSCHECK a data file detailing the following fields:
- company name
- country name of where your company is based
- customer or supplier name (customers and suppliers should be sent separately)
- payment term description (e.g. 30 days at the end of the month following invoice date or 30 days with 2% discount)
- country name of the supplier or customer.
TERMSCHECK then take the data and compare it to their database of over 700,000+ records. Their algorithms don't just find exact matches but are capable of performing various Boolean searches to arrive at a series of "fuzzy" matches excluded these from the list of matches. Also once any data is 4 years old it is purged.
Once the analysis has been completed, TERMSCHECK require payment before sending the results.
Informita TERMSCHECK only deal with companies. Pricing is based on three simple principles: If client shares data or not, the number of matches, and the payment currency. Standard charges are:
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TERMSCHECK works on the basis of the more you can share, the less it will cost. Typical usage scenarios:
- Scenario 1: Share your data on TERMSCHECK database, sharing 20,000 items of suppliers with their terms and TERMSCHECK find 200 matches, then GBP charge would be £1,000.
- Scenario 2: Do not share your data on our database, sharing 20,000 items of suppliers with their terms and TERMSCHECK find 200 matches, then GBP charge would be £3,200.
Clients only pay for the number of matches. So if TERMSCHECK find 100 hits per match, client is still only charged for one match.
TERMSCHECK Users and benefits
TERMSCHECK database has grown by 7% net since the formal launch in November 2014. This is net of the records more than 4 years old that they cull each January, so oldest data is from 2011. The website has had over 3,000 visits since the launch. Over 48% of those visits have been from the United States, 23% from China and the remaining members of the top 10 are made up by the United Kingdom, Germany, France, India, Japan, Russia, Czech Republic and Australia.
Clients use the results to help them plan any changes to payment terms that may be upcoming with their suppliers or customers. When TERMSCHECK ask their clients what they found most beneficial about the service, “They tell us that it is the best way they have seen to cut through all the downsides of regular benchmarking and get real information about their suppliers and customers that will guide their strategy on working capital.”