“Approved Payable Finance”, later referred to as APF, is a buyer-centric business which comprises of the discounting of supplier’s invoices by the buyer’s bank. The advance funding granted to the supplier is based on the buyer’s upfront approval to the financing bank to pay these invoices on due date.

APF is a joint program of the buyer and his bank proposed to the buyer’s suppliers. It is a mass business which requires full electronic interaction between all participants and high automation (STP) at the bank’s back office.

Note: Multiple names are used in the market for defining this type of Supply Chain Finance business (SCF), e.g. Confirmed Receivables Purchase, Reverse Factoring. The name “Approved Payable Finance” is taken from the BAFT-IFSA terminology.

The following outlines the back-office inherent processes for APF.

• Within the application a pool of documents is kept. It contains data of invoices, which can be approved by the buyer. The data is inserted either automatically or registered manually. This pool is automatically processed to generate APF offerings or direct APF advance fundings to the supplier for approved invoices.

• When an APF funding is executed, the advanced amount is credited to the supplier and the credit line of the buyer is used.

• On maturity date of the financed invoices the buyer is debited and the liability amount is released from his credit line.

• The afore mentioned transactions are executed usually without any direct user interaction. Although full STP is aspired, the complete advance business for not standard cases in a manual way will be fully supported.

• Advance offerings and direct advances are accessible as contracts and can be the base for a manual transaction processing with the participants.

• As part of the condition scheme the relevant fees, rates and calculation methods are defined.

• The DOKA-NG workflow engine handles the automated execution without user interaction, e.g. creation of advance offers, repayment of advance upon due date, etc.

• Special cases like partial repayment of the APF, extension of the APF through exception handling or free messages are supported.

• When an agreed interface format, e.g. APIs via a bank's web front-end application, will be used, DOKA-NG can automatically generate messages to synchronize the database kept within the web front-end accessible for the buyer and supplier.

• DOKA-NG supports standardized communication channels to send direct messages to the buyer, the supplier and for interbank processing to banks:
  • Settlement information and free format messages can be sent through existing standardized channels, e.g. via the SWIFT-Network.
  • Payments can be sent through several clearing channels as interbank payment messages.
  • Status information to buyer and supplier are handled via APIs.

The following diagram illustrates the APF processing components and their interactions.

More details on how the invoices are stored in the document pool (see Maintaining Finance Base Documents) and grouped by Periodic Grouping of FBDs to create an offer or aggregate a funding payment are detailed below.

APF activities (i.e. Offer/Advance) includes batch of documents (mainly invoices). To facilitate these APF activities and store the documents (invoices), a document pool (see Maintaining Finance Base Documents) is maintained. Documents can be stored/added in this pool using below three options.

1. Automatically - Import electronic file (.xml) through Manager for Incoming Messages
2. Manually - Manually update document details in Maintaining Finance Base Documents
3. Manually - Manually when creating APF Offer or APF Funding contracts.

Documents which are imported from the incoming xml's through Manager for Incoming Messages will auto create an APF Offer contract. Thereby the document details (i.e. invoice number, invoice due date, etc.) are automatically updated in the document pool.

When Periodic Grouping of FBDs is executed at this stage

it will do a payment aggregation and create a new APF Funding contract, thereby crediting the supplier for the advanced amount. The status of these documents/invoices (“approved/offered”) will get updated accordingly.

Documents which are directly updated through the document pool will be picked up by the Periodic Grouping of FBDs when it is executed

and create an APF Offer contract or will do a payment aggregation and directly create an APF Funding contract, based on the “Offer flag” being enabled or not for the Maintain Pairing Buyer/Supplier. Once the respective contracts are created, the status of these documents/invoices (“approved/offered”) will get updated accordingly.

When an APF Offer contract or a direct APF Funding contract are created manually also, the document details from the contract gets updated in the document pool. The grouping manager is not required here as the user is manually creating the 'Offer' and/or 'Funding' contracts. The status of the documents/invoices (“approved/offered”) will get updated accordingly.

If the Auto Repayment flag is enabled for the pairing setup (see Maintain Pairing Buyer/Supplier), an APF Repayment transaction gets processed for the contract at the maturity/due date of the documents and the buyer will be debited for the advanced amount. The status of the documents (“repayment/closed”) will also get updated accordingly.