US Bancorp is partnering with niche fintech company LiquidX in a bid to drive growth in its supply chain finance business.
The partnership will allow US Bank’s parent company to give business customers who have been impacted by supply chain issues during the pandemic more reliable cash flow, the bank said Tuesday.
Using LiquidX’s system, the $587 billion asset bank will essentially buy the contract receivable between a supplier and its buyer in order to get payment from the supplier faster than it would normally arrive in a system that was besieged by delays.
Suppliers often have to wait 60 days to receive payment, which can be extended up to 120 days in some cases, putting a strain on their finances, said Dan Son, who oversees global trade and finance. supply chain at Minneapolis-based US Bank.
“Because of COVID and supply chain disruptions, companies are starting to realize that these solutions are very, very central to their whole ecosystem,” Son said in an interview. “So there is a lot more demand for these products now. “
Typically, buyers and suppliers had to execute financing agreements with US Bank by manually exchanging Excel spreadsheets and other documents over email, making it difficult for the bank to scale the business.
But LiquidX provides a system where those documents can be uploaded and sorted automatically, allowing suppliers to get paid almost immediately and giving buyers more time to fulfill the obligation, according to US Bancorp.
Business “can only scale if it is automated and digitized,” Son said.
Although US Bank has not disclosed how much it will charge customers for the product, the price will be based on the rating of the company making the purchase, Son said.
Jim Toffey, CEO of LiquidX, said in a statement that the partnership “will make transactions easier, faster and cheaper for US Bank and its enterprise customers.”
The partnership could mean billions of dollars in growth, Son said. US Bancorp expects continued loan growth in 2022 after posting a 3.4% quarter-over-quarter increase in the first three months of the year.
“It’s not like let’s grow-5%,” he said. “We’re talking holistically, billions, in terms of throughput. We certainly have a desire to grow in multiples. This is the scale we envision.