Leading Pharmaceutical Company Drives Enhanced Liquidity for its Supply Chain

Headquartered in Mumbai, Cipla Limited is an Indian multinational pharmaceutical company with a global presence. Cipla’s product portfolio spans complex generics and drugs in the respiratory, anti-retroviral, urology, cardiology, anti-infective and various other vital therapeutics. Present in more than 80 countries, Cipla has 46 manufacturing facilities producing over 1,500 products.

Cipla has a clear vision of being one of the top pharmaceutical companies in India. Like many leading pharma companies, a seamless supply chain is critical for Cipla to deliver medicines on time. Cipla heavily depends on the health of its supply chain and ensures that it operates without disruptions. Therefore, along with a few core functional priorities, Cipla focuses on driving cost efficiency, improving business processes, enabling supply chain finance and using data analytics effectively to generate valuable insights for business impact. As improvement is a continuous process, Cipla constantly revisits its existing business processes and finds ways to digitise, simplify and make them more efficient for its supply chain.

The challenge

India is the largest market for Cipla, followed by Africa and North America. With the overarching principle of growth with governance, the finance team at Cipla focuses on balancing growth with value creation. The role of the team has evolved over the years owing to the ongoing digital transformation and the voluminous increase in data. 

With a vast network of supply chains in India, Cipla was looking to reduce the overall bill cycles and ease working capital accessibility throughout its supply chain. 

Many of Cipla’s small and medium suppliers used to reach out on an ad-hoc basis for early payments. Since this had to be done out of the ordinary course of business, Cipla was looking for a digitally automated solution to help hundreds of its suppliers participate and receive working capital in one go. Cipla also wanted to enable higher capital returns through this program.

In a nutshell, Cipla was looking for a smoother supply chain program that was entirely digital and automated; didn’t have the hassles of documentation, manual processes and other complexities; and could be expanded to a wider supplier base. smoothly integrated with its existing bank program. 

The solution

Cipla partnered with C2FO to launch a holistic one-stop supply chain liquidity solution. Cipla’s finance team implemented C2FO’s Early Payment program to provide easy access to working capital throughout its supply chain. 

As part of the pharmaceutical industry, Cipla has longer bill cycles owing to multiple steps required in the bill booking process. Therefore, Cipla plugged its Goods and Service Tax (GST) database into C2FO’s Early Payment program to reduce invoice booking time. This enabled C2FO to approach Cipla’s suppliers at the GST stage and expedite bill bookings for interested suppliers. 

With this implementation, the invoices are now booked earlier, which helps create additional discounting days, leading to increased savings for Cipla and faster availability of working capital for the suppliers. The program also gave clear visibility to the suppliers of the available invoices, booked invoices and the respective due dates. 

It was also an excellent treasury management solution as Cipla was improving returns by investing in its supply chain and the growth of its supplier partners. It was a win-win situation for both Cipla and its supply chain. This helped Cipla enhance its relationship with suppliers by giving them a transparent view of the cash flow. 

The outcome

Cipla has been successfully running its partnership with C2FO since 2018, and the company has been able to strengthen its supply chain every year. It was able to run the program throughout the challenging financial environment during the pandemic, ensuring that its supply chain had access to adequate working capital.

• Within the first year of the partnership, Cipla saw about 70% of its suppliers register on the C2FO platform. 
• There has been a 90% increase in invoice acceleration volume since the program’s launch in FY2019. 
• As a result of this non-debt solution, Cipla is experiencing a 500bps improvement in cash yield right now. 
• Suppliers, on average, received payments 25 days earlier and could meet their working capital requirements.
• In 2019, Cipla won the highly commended Adam Smith Award Asia for the ‘Best Working Capital Management Solution’. 
• More recently, Cipla also bagged the ‘Best Finance Team of the Year’ award in the Pharma Industry & Large Enterprise category at the 7th Future of Finance Summit and Awards 2022. 

The partnership with C2FO has resulted in a strengthened balance sheet with robust cash flow generation for Cipla.

About C2FO

C2FO is the world’s largest platform for working capital. We serve over 1 million businesses representing $10.5 trillion in annual sales across more than 160 countries. Our online platform connects more than $110 billion of daily accounts payable and accounts receivable. Whether you need working capital or have excess working capital, Name Your Rate®, and the C2FO platform will match your request in seconds. You can accelerate AP or AR on demand, providing you, your customers and your suppliers greater control over cash flow. You can also utilize AR financing and other data-driven funding options. 

C2FO is working capital, working for everyone. Our mission is to deliver a future where every company in the world has the capital needed to thrive. To learn more, visit C2FO.com.