How Landgard, NORD/LB and Traxpay are redefining trade credit insurance and promoting resilience and transparency through consistent digitalization along the entire value chain.
The Landgard growers’ cooperative uses its own fresh produce logistics to supply major retail customers – from DIY chains to food retailers. The cooperative ensures sales security for producers on the one hand, while delivering high quality products – directly from producers – on the other hand. In early 2021, Landgard opened up new distribution and procurement channels as part of their business expansion. However, the relatively restrictive policies of credit insurers, especially in times of crisis, made it difficult to work with new partners. This ultimately prompted Landgard to seek alternatives and investigate whether or not Supply Chain Financing could be part of a new solution.
Landgard’s first experience with Supply Chain Financing was receiving an invitation to participate in a Supply Chain Finance program – as a supplier. In the Traxpay workshop at the Finance Symposium in Mannheim, Michael Maas, Head of Finance and Accounting at Landgard, Katharina Reineke, Project Manager Supply Chain Finance at NORD/LB, Nils Albers Director Sales, NORD/LB Corporate Clients and Jan Osenegg, Head of Finance & Treasury at Traxpay, discussed why and how the company now offers its own suppliers various SCF tools. The panel, moderated by Kate Pohl, focused on goals, implementation and the joint development of new types of SCF products as well as the cooperation with the joint partner bank, NORD/LB.
“As NORD/LB, we see ourselves as a strategic partner for our customers, modernizing and digitizing products. Therefore, Traxpay is really the perfect partner for us. We have been working together successfully for several years now. Our cooperation is a true collaboration – never a competition – and we both bring our strengths in order to offer customers optimal added value,” explained Katharina Reineke.
“Since joining as a supplier, we have come to appreciate the benefits and flexibility of the Traxpay platform. Supply chains had to be secured at the beginning of the pandemic, due to collapsing trade credit insurance limits as well as supply shortages, yet at the same time we experienced strong sales growth! To support liquidity and flexibility, we offered our suppliers an early payment program using Dynamic Discounting. We then augmented this with Digital Guarantees,” elaborates Michael Maas. “Typically, credit insurance is taken out by suppliers for at least one year and for the entire annual sales volume. However, in case of default, an insurance claim is rarely made for 100% of the receivables. The respective buyer has no possibility to actively influence this process. In contrast, payment guarantees are supported and initiated by us. This gives Landgard the opportunity to take the initiative and offer our suppliers protection against payment risks at rates that are based on our credit rating.”
Since a large part of Landgard’s processes are already automated and digitized, the goal of Landgard and Traxpay was to automate and digitalize the issuance of guarantees. They worked with NORD/LB to develop an innovative solution that is unique to date. Landgard launched Dynamic Discounting at the end of 2021 and created the technical infrastructure for digital guarantees IQ 2022. Only a few weeks after its launch, Landgard was able to roll out this service. “This was one of the few IT projects that I have experienced that was both within the budget and on schedule,” adds Maas.
NORD/LB issues the certificate digitally, which is then made available to the supplier via Traxpay. Jan Osenegg explains, “Ultimately, we didn’t reinvent the wheel, but reinterpreted it in a digital way. As a platform, Traxpay provides technical solutions combining innovative products with a human component. Traxpay does the heavy lifting in a SCF program by addressing all suppliers personally, and when possible, in their local language. All this is executed regardless of the financing partner.
Nils Albers describes the project from the bank’s perspective, “we are excited about Landgard’s customer journey because we were able to assist our client along the entire value chain, combining “new world” technology with “old school” products. This was extremely exciting and rewarding because all parties were cooperating and supporting each other. We are particularly pleased because we could support our customer in an additional product area.” Reineke adds, “the desire for digitalization is becoming ever more common among corporate customers and thanks to Traxpay we can support all the SCF needs via one partner and one platform. Platforms are constantly developing in various directions, for example in regard to sustainability and the integration of ESG ratings.”
Creating guarantees involves a large amount of both manual and administrative work. On top of that, the potential for error is significant. Thus, the motivation of this project was, in part, to achieve a digital process. The solution crafted by Landgard, Traxpay and NORD/LB works without paper and the usual mailing of documents. It is not only digital and cost effective, but also fair and flexible. In summary, all participants see the creation of Digital Guarantees as an important contribution to stable and resilient supply chains.
You can find more information about our new Digital Guarantee feature here: https://www.traxpay.com/insights/traxpaytv-digital-guarantees/