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Developing a financial solution for longer payment conditions: case study at Nedap N.V.

Nieuwboer, E. (2013) Developing a financial solution for longer payment conditions: case study at Nedap N.V.

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Abstract:During recent years Nedap is facing problems with payment conditions of partners, these payment conditions fluctuate from 30 days to sometimes even 150 days. Especially in Spain and Portugal in the food retail is this problem prevalent. Partners order at Nedap and install the goods at the customers. These customers can be big retailers (H&M, Decathlon) and small retailers with only a few shops. Nedap is demanding from their partners that they pay within 30 days after ordering the products, but due to long payment periods at customers this is not always possible. Even when partners are offering special financial solutions (renting, selling the contract) customers do not pay on time. This means that cash of Nedap is stuck in accounts receivables and it cannot be used to invest in new projects or assets. So for Nedap it is important that the payment conditions are reduced from more than 120 days to the demanded 30 days. In this way Nedap does not have to invest that much in working capital and can undertake new profitable projects, which will benefit both Nedap and their partners. In order to achieve this Nedap should work together with financial institutions because they offer a variety of solutions that could be beneficial for Nedap These solutions range from factoring, renting to leasing and distribution finance. To develop a solution the requirements of Nedap, partners and financial institutions are revealed with interviews and conversations. For Nedap it is important that partners pay within 30 days and that partners are financed so they can order and sell more products. For partners it is important that a solution is simple and that it has advantages to the previous solution, such as interest advantages. Financial institutions do not only want the “problem” countries Italy and Spain in their portfolio, as these are high-­‐risk countries. These requirements are matched in order to develop a solution that fits all the parties involved. Therefore the advantages and disadvantages of all the solutions for Nedap will be discussed. The most beneficial solution showed to be distribution finance of GE Capital. This financing fits all the requirements of all parties, Nedap gets their cash within 30 days, the partner is financed and can offer the same solutions to customers as they are used to.
Item Type:Essay (Master)
Nedap N.V., the Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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