Greensill is the market-leading provider of working capital finance for companies globally. They provide Supply Chain Finance around the world, from 20 days to 20 years and beyond, with ranges from $10mm to $5bn.
Ilkka is responsible for originating and structuring innovative financial solutions for clients across the world. Prior to Greensill, he served as CEO for three Australian listed companies and growing businesses to a global scale across a number of industries. And is what he calls himself an “unemployable character”
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Greensill is the market-leading provider of working capital finance for companies globally. They provide Supply Chain Finance around the world, from 20 days to 20 years and beyond, with ranges from $10mm to $5bn.
Ilkka is responsible for originating and structuring innovative financial solutions for clients across the world. Prior to Greensill, he served as CEO for three Australian listed companies and growing businesses to a global scale across a number of industries. And is what he calls himself an “unemployable character”
Discover more details here.
Some of the highlights of the episode:
Follow us on:
Instagram: http://bit.ly/2Wba8v7
Twitter: http://bit.ly/2WeulzX
Linkedin: http://bit.ly/2w9YSQX
Facebook: http://bit.ly/2HtryLd
Radu Palamariu: 0:00
Hello and welcome to the leaders in supply chain Forecast. I am your host brought a problem. Are you managing director of Elkan Global? Our mission is to connect the supply chain ecosystem by bringing forward the most interesting leaders in the industry. And it's my pleasure to have with us today ill catalysts with Vice Chairman of Green Seal Brinson is the market leader provider of working capital finance for companies all over the world. They provide supply chain finest from 20 days to 20 years and beyond, with the ranges of 10 million to five billion in find missing credit lines, Ilka is responsible for originating and structuring innovative financial solutions for Green Seal Stein's Across the World and Pride Green Seal. He served the CEO for three Australian listed companies and he was involved in growing businesses at a global scale across a number of industries. Also very interestingly, he is what he posed as a highly unemployable character. And I will let him tell us more about that shortly. Pleasure to have you with us today.
Ilkka Tale: 1:03
Good afternoon Water. Absolute pleasure, Teoh, be on your podcast and enjoying your listeners around the world. So thank you very much for the opportunity in the time
Radu Palamariu: 1:14
our places. So let's let's start with this with this one. Because I think and I do remember when also when we met, that started my interest. When you said that your highly unemployable So tell us a little bit. How did somebody like yourself on and being highly unemployable end up in in green zeal
Ilkka Tale: 1:31
that the high Harley unemployable side is being that for probably just over 20 years? And I won a number of innovation course of our innovation awards over that 20 years. So I tend to be called on entrepreneur Andi. I don't like the word entrepreneur because there's a slight difference that when you're highly unemployable and you start a business, you're very focused in turning a dollar because you may have a family to fade yourself. Stephane bills to pay. And that changes slightly the context that you look at the world on the way that you behaving that way that you operating. And I think entrepreneur is a little bit loosely used as a word, and, um, hence I prefer just hardly unemployable known or give me a job, so I have to go in Create Jobs and I've spent a couple of decades doing that. And the green still story was young young Australian chap living in London. Lex Grain still started the business in 2011. Andi with a couple of nights in London, one in one in the US and And he was here in Sydney, catching up with a friend of mine who were doing a couple of startup businesses we've at the time and next came and pitched the concept to Matt Costello and I and other while it is ridicule. If I had this type of funding, I did all these other businesses, I would have done a hell of a lot better than what I did. I think it was incredibly valuable. And so I met a couple of phone calls to three CEOs that I knew, and Lex and I went on to mix up the next day and licks one and pitched it on Duh. Lex got his first to clients in Australia off the back of those 1st 3 meetings, and most your clients are still clients. A great deal today, which is wonderful, Andi know as you doing in in that start up space mad and I kind of got involved in. We work for free for the first year and set up the Australian operations of the business. I think we're employing number seven and eight at the time on, and we found out this train operations and founded our operations in Asia in China and India and Singapore, where we currently have officers in Hong Kong. I would we currently have officers today on. So the business has grown considerably since that time now 650 people globally, and we all cried in 165 countries around the world. So it's been amazing journey.
Radu Palamariu: 4:09
Uh, that's for sure. Um and for a for a five year old, you know, in very simple layman terms, maybe Can you take some time to explain to our listeners that may not know what? What does Green still do? Actually, in very simple ways. Put
Ilkka Tale: 4:26
simply, we fund tried refund accounts, payable accounts receivable, infantry, short turn mid term, long term, and we do that for hundreds of large Corporates around the world. We have millions of supplies ranging from very small businesses to large suppliers on our platforms and we do find billions of dollars on on a weekly basis for businesses supply chains. I think last year we found it about $142 billion. Thinks year we're expecting to find significantly higher than that value. So we were really want the larger tried finance funders and providers globally.
Radu Palamariu: 5:20
Yeah, and to make it very practical, maybe. And you can share names if you can if you cannot no need to share names, but just kind of take one or two client examples, Um, and and how you work with them, how you have them and make it very concrete.
Ilkka Tale: 5:36
Be absolutely So if if I take one of our large earlier clients, which is public knowledge are Vodafone Group Telecommunications are global telecommunications provider we They initially had what's called a supply chain finance program of payables program run by a bank in the bank Run that program for seven years. Uh, it was very manual in terms of supply on boarding supplies had to sign a physical document had to go through, um, anti money laundering checks and know your customer checks that banks didn't and would take sometimes many months to on board a supplier. And so that particular company had, uh I think was 27,000 supplies at the time and they don't bordered. It was close to 900 suppliers, the bank and boy about mine under supplies over the space of seven years. We came along and implement a technology driven solution which was embedded into Vodafone's S a P platform for a supply to get access to funding. Earlier, as soon as the even voice was approved on day one or Day five took 10 seconds toe on board the supplier onto the platform on day 30 seconds later, the supply could get paid for its invoices immediately on so they no longer have to wait. Rival basically improve adoption rights by supplies. So in the first month of going alive, I think we're on board in 19,800 supplies eso that liquidity access was mad available toe every supply in the supply chain irrespective of size. Previously that liquidity access was only given to the largest supplies on that, um, on that program. And so we Democrat ized working capital availability to everyone in the supply chain through album initially started that the grand Onda. The impact of that is quite substantial. So if you look it from a holistic perspective, there were three impacts that from a macro economics perspective that we delivered to two economies and clients, the first ease insolvencies in its amaze go down. And the reason insolvencies go down is because all of a sudden cash doesn't become a constraint. They get capped, paid cash early and so insolvencies reducing that's been empirically proven in imagine markets that were operating. The second impact that happens is that the percentage of JD pay contributed bias amaze increases because all of a sudden, when it isn't May is no longer cash constrained. It can afford to bid for the largest slice off a larger corporate work and whereas previously, it wasn't able to do that because it didn't have to balance it to fund it. So now it can. And and so the percentage of GDP contribution bias amaze goes up. And that's been empirically proven in markets every operating the third impact, which hasn't been empirically proven. But where way hear back from our clients directly on this is that the cost of good salt goes down for our clients Andi intuitively when we first started down this pathway working, uh, rolling out these products nine years ago green seal the feedback we were getting from intuitive response for May, every CFL on group treasure and J. Peterman officer was a cost again. I got because you're going to get a discount on the time on from the supplies invoice to find it. So they're gonna end up adding it on to us so that the expectation was that costs would go up. The reality is paying the complete opposite. Businesses realized that if you're small enterprise, that's more business and your funding invoices that are due to you from. But if I Group PLC, your cost is going to be circa 10% plus from interest rate perspective. And if you're getting funding costs, sitting on about a fine program using the power of our defines balance sheet side, 2% Opteron, um, interest ride. That's a massive differential. You're not gonna pass. You're gonna keep the I percent savings to yourself. Andi Andi, your net ahead from a business perspective. So so cost of goods goes down because the smaller businesses are bidding for a larger proportion of work for. They're larger. Clients on the bell always been on price because they don't have the same overhead costs that your largest supplies may have in your supply chain ecosystem. And so that's been quite a revealing trend that we're hearing back from our clients directly when we do roll out these payables programs cause which attrition in what we call supply tank finance
Radu Palamariu: 10:40
Mm, I wanted to ask you because I guess the question that you probably hear a lot is like, What is the difference between you and a bank? Cause, you know, you obviously finance trade this bank's most banks finance straight. What would you say would be the main differentiator? And I also know that probably banks are the ones that are helping you guys and financing some of your programs as well.
Ilkka Tale: 11:01
No, absolutely. So we do. On a bank Were bank holding company. We were brought a small bank, 74 year old Landis Bank in Germany six years ago. Now Andi, it's now called Grain Sold Bank on its a deposit taking institution across Europe s O. We streamlined its for tax down to a couple of products, generally funds as it's the programs that we run on its now profit making. So we do on the bank, so we understand. So we have created a finding ecosystem. So, uh, which ranges from your sovereign wealth Funds are owned, bank our own balance. See, the warehouse finds that companies, like credits Greece running out behalf banks are large funders of the program's been partners for us in the marketplace. So both global banks, regional banks and local banks by the underlying assets that returned to create or fund the programs that we do. Because if you think about it, if you do it, if you got a large corporate, such a Spotify and group, and I'm making up numbers now as an example, if there's 900 supplies on board, you're probably finding three billion roughly in flow on the regular dialysis on that program. But if you're doing 19,800 suppliers, they're gonna be finding $10 billion in flying and the single off the gold limits. Anyone institutional, anyone bank the funded off their own bat that they No one has that type of capacity. Eso You need to have a range of find their options available to you. So you know, we also issue bonds in volume. I think in January I think we should I think it was about 44 bombs every business day on your actually increase dream. So the largest issue of bonds Inbar you on the European bond exchanges. And so the range of investors that we bring in to buy these underlying assets recall them assets but their receivables or viable Zoran men tree eyes very, very broad, ranging from sovereign wealth funds. The bank's capital mark applies our own bank a warehouse funds and have on balance sheet. So that just gives a better price point that we can find out because there's broader competition for on underlying name that we're funding with its better friend group will see or hear bus or wherever it may be.
Radu Palamariu: 13:36
Ah, in the current reality that is unreal in some ways and unprecedented in always with the covet crisis that has affected the world. How do you see some of the challenges that are now hitting upon companies? And obviously you have different challenges for different companies you have sme is you have bigger MNC is but from our supply chain financing How Do you see this crisis having an impact and playing out in the next quarter's?
Ilkka Tale: 14:04
These are interesting times we live in. It's unprecedented in terms of our experience of having such a dramatic demand. Ah, health event driving a demand event which has sent shock waves through the equity markets over the last 3 to 4 weeks on day sigh with what's happening in Europe. In North America, we have had a major disruption from a liquidity perspective. I think initially there was a sense of panic. Suddenly we saw banks stopping there. Any line that they had out that was uncommitted. They were becoming running back to home base. Interest rates tripled. Didn't matter if you were a triple A credit or ah, single, be credit your interest rates tripled if not for triple, because liquidity kind of ran out of the marketplace. Investors, you pull out funds from banks. We saw quite a across many jurisdictions, a lot of hoarding occurring in the bank systems. People were panicking and taking cash out on holding cash, which was kind of quite interesting because the whole world went digital. No digital banking immediately, you know. So you tried the hand cash in any market to to any retailer our food store. They just generally didn't accept it. Everyone just card only financing. Once the virus rolled out and restrictions stopped occurring. And so that was three weeks of very challenging times for everyone. We find that allow programmes globally for all our clients. We held our nerve on pricing, wouldn't change our pricing and obviously some of their costs went up. Triple we copter. We maintained a a steady nerve and what we're seeing, we're seeing green. We're seeing a change, you know, For the first time late last week, the commercial paper market came back on large Corporates were started. A issue commercial paper, a dining, the markets. We're seeing banks coming back to fund new deals on we're seeing. No, I think brain shoots of optimism on the funding side and liquidity side the big impact that happened across many supply chains, which has caught lots of corporate unawares. He's what the insurance Matt, what has happened in the insurance markets? And so some insurers have pulled completely away from tried insurance in the challenge there. Easy's. But if you are, have a supply chain, your supplies are usually using trade insurance on your name to be ableto find you, Andi risk themselves from you and all the tried insurers. Having many of the tried and short has pulled out because they're highly exposed from insurance perspective with the recession that we are most certainly in globally. Andi, they're trying toe insurance, trying to limit their risk. Andi, I think the insurers will continue to keep pulling out until about July August. They're still trying to understand what they seem back these because governments of responding at different stages in terms of support but what we've seen that's occurring and it really started in Germany's. The German government came and gave a a blanket backstop to all businesses in Germany that if anyone funded a German business, they would guarantee it. What's insurers were pulling out? The same has occurred in France were expecting something similar in jurisdictions. Other wearing conversations. Obviously we've governments and reserve banks in many jurisdictions around the world, and we're expecting something similar in in most major. I received the country's they're all discussing it and they're rolling it out as a replacement whilst insurers nervous marketplace so that that has a really significant impact on any company's program. But what we bring applies is that because re founding voices, we confined invoices subject to the credit quality of who were servicing, obviously. But we confined invoices at purchase order. And so if you roll out solutions such as that, your supplies don't need insurance, and then you can still maintain the supply change in an effective manner as long as you keep liquidity earlier to you supplies. And and so it's it's toes there where there's a problem there out. There are many ways to solve for it on D. I think that's where green Still no, We're quite adept at solving very complex problems for our clients, and I think that's probably what we're best known for in the marketplace is being ableto solve physical challenges that Corporates face driven by market outcomes.
Radu Palamariu: 19:05
What what I saw in the last couple of days. They were the major banks in America and JP Morgan Bank of America and Goldman Sachs aiding. They had in a few others that had their Citibank had their earnings announcements and ah, I guess a consistent, consistent information that came out of that, that all of them had allocated significant blankets of offers for default loans. So I think it was in the in the billions for each of them they're expecting accompanies to default on their on their loans and and, um, basically toe acquire some bad debt right in that. So I This is something that prompted just now in my mind. So that's on the banking side. And you did say that you look at, you know, when you decide to fund you look at the credit ratings of the organization. But is there such a thing as a silver bullet in ensuring that you don't end up, you know, funding obviously companies that well, you know, especially in under the current situation. Obviously they can go bankrupt. Ultimately,
Ilkka Tale: 20:06
I think in the ordinary course of banking banks on thunders wise, prepare full. I bad that situation that you do have periods of time when you do have get hit by bad debts and you have periods of time when you don't on gets very prudent for banks, toe increased their provisions heading until in tow, the recession that we're going into, um, we we co fund that's every facility that we put in place. We obviously use our own funds in many of them on and obviously do that in our bank. We try to ensure that when we find the things for our own bank and when we found through the warehouse funds that we deploy, we usually have insurance. Rap. We have a panel that 24 global insurance ever getting insurance rap on. And so we try and ensure that we have an insurance trap which covers any losses. Way to have a very large first loss space in our business. That's just our business model that we operate under. The assessment process on the credit risk has become much more difficult at this point in time because of Covered 19 on DSO. It's a very different on a scenario that we're facing compared Teoh any downturn that we have experienced historically on DSO. It does need a different way of looking at risk. It requires, obviously, significant did your diligence on on any transaction that you do but also does. You know what our governments are doing globally on supporting businesses makes that role somewhat simpler. If you know the backstop, the governments of providing are essential in these can't prime in this current environment to maintain confidence in our systems. And I think they're doing an excellent job universally in that regard
Radu Palamariu: 22:12
and looking forward at the next and the next year's in the next. You know what, then? The developments in trade, finance, the technology, advancements of digitalization and all of that that this crisis is. As you rightfully said, no cash allowed. I hate is accelerating speed. Where do you see when you see trade finance in a couple of years down the line? How What would be the main developments that you see happening?
Ilkka Tale: 22:39
I think anything that brings cashed closer from a realization perspective is beneficial to weather storms, such as thesis with whether it's Clayton your accounts receivable early or collecting your paying your supplies earlier or having human tree funded area cash is king in a downturn environment. And I think any company that doesn't have alot tools available to them to help maximize their cash at any given point in time, whether it's in good times or bad times, you don't have if you're a group treasure or see if our duper Komen officer you don't have the array of tools on then many, many corporate that don't have the arrived tools that are needed in this count environment. It's gonna be tough on Barry's. Corporates that have a full quiver of tools to use well will benefit and are benefiting by being able to continue to tried and continue to find and continue to be operational and support their case supplies eso their ecosystems are intact when demand kicks in and starts building up again. When we come out the other side of these,
Radu Palamariu: 24:01
yes, final question from me and them and especially interested to hear your thoughts. Given the where we started the conversation and the fact that you know the attribute that that you hold in Ah, I respect about yourself is that highly unemployable characteristic you've you've ended up being CEO of a couple of companies invented of being exit in exactly roles in a number of organizations. So if you want to give a couple of pieces of advice, maybe it's the younger listeners tuning in this podcast to have a successful career in a in a corporate environment, what would that be?
Ilkka Tale: 24:36
I think, um, if you're working from an innovation perspective, I think the goal for all of us. He's too. Yeah, who learned how to think like a child? Is that, um, when you approach problems with childlike innocence? I'm not the baggage of what you might have learned to a war you might have experienced. You end up developing better solutions and better outcomes, and you're much better equipped at working in different industry sectors in different markets, either within your local area or in a global find. Work on having that and nurturing that ability to think like a child when facing a problem is incredibly invaluable. Your second thing is, perseverance needs to be high. You really need Teoh, have thick skin when when you're developing new products, developing new markets, developing completely new businesses, and no one has heard off you. Do you get a lot of negative feedback? You get a lot of nose on. Do you need to be out of reframe? Those knows that he had that you get from the market as a feedback mechanism that helps you enable to improve the product or the service is delivering to clients. And so rents struck by adversity are really framing the way that you approach that problem eyes incredibly valuable in terms of building out a solution set that serves plants maids. The 3rd 1 is the diversity of times. I'm for a very, very long time. I'm a firm believer of having incredible diversity of talent, have fairly straight personal rules around ensuring you've got diversity of gender, university of ethnicity. The message. We have religious toss because it's those teams, those people that cracked your success when you're rolling out of business. And if you don't have diversity, you just have groupthink on groupthink is just a bunch of people who come up with the same solution, face the same problem in the same way. And, you know, with the same problem with, you know, with the same solution. You don't actually solve the problem. So ensuring how diversity teams is absolutely business critical. This Diane age in a global marketplace.
Radu Palamariu: 27:14
Yeah, well, thanks a lot for for sharing. I really appreciate the Thean sites and case studies do imparted with us and at the time, and uh, yeah, let's stay safe. Let's stay healthy. And hopefully this crisis will go away soon when we can get back to Life Aziz Way used to
Ilkka Tale: 27:35
love lovely street DiRado and stay safe and all my best to your family. Thank you. Thank you
Radu Palamariu: 27:42
for listening. If you like what you heard, we should to go to www dot l called global dot com and treat the podcast button for all the show. Notes of the interview Also subscribe to our mailing list to get our latest updates. First, if you're listening through streaming platforms like iTunes, Spotify else teacher, we would appreciate a kind of you five star works best to keep us going and out production team happy and, of course, share it with your friends. I most active Arlington's Do Feel free to follow Me. And if you have any suggestions on what what to do and hooting by next, don't hesitate to drop me a note. And if you're looking to hire top executives and supply chain or transform your business, of course, contact us as well to find out how we can help