Orthem’s financing needs
Orthem was referred to NoviCap through Partner Deloitte to explore the possibility of giving the company a Factoring line with which they could anticipate the collection of their invoices from government clients. They also explored other ways of financing working capital, such as Supply Chain Finance and Dynamic Discounting.
After the months of confinement due to the Covid-19 pandemic, the company was in a comfortable cash position and willing to explore different financing programmes for its suppliers to their supply chain. These two circumstances resulted in NoviCap’s Dynamic Discounting programme, the best option to meet its supply chain optimisation needs while generating additional profitability.
NoviCap’s solution for Orthem
To this day, the solution acquired by Orthem and its conglomerate of more than 35 companies and joint ventures has been NoviCap’s Dynamic Discounting. The project was launched in August 2020 and allowed them to “put to work” their idle cash which at the time was costing them money by keeping it in the bank with negative interest rates.
Thanks to NoviCap’s Dynamic Discounting, Orthem was able to offer financing to its suppliers, who were heavily affected by the Covid-19 crisis, and thus improve their supply chain. In addition, by offering discounts using its own cash flow, Orthem is obtaining a return on managed advances. The programme launched in the summer of 2020 has been a resounding success for Orthem, with 88% of its suppliers invited to participate in the programme and advancing their invoices with the offered discount.
Orthem plans to channel more than 36 million through NoviCap’s Dynamic Discounting in 2020, and to date has achieved more than 800,000 euros in discounts through this solution, making it the most profitable project the company has faced so far this year.
According to Orthem’s Chief Financial Officer, Guillermo Arróniz González,
“What is a better investment than one in the company’s own current assets and with a return of close to 8%”