Improve your financial ratios
Numbers matter.
Companies generally set targets for their finance and treasury teams on working capital, margins, and the key ratios that are used by analysts and bankers to evaluate the business.
Implementing a PrimaTrade solution can significantly improve these financial ratios.
What are the benefits?
PrimaTrade's platform is a game-changer for supplier payments.
Automate early payment approvals so all suppliers can be included.
Make early payments truly early by approving against supplier data and before delivery - for example, with international suppliers.
Cope with multiple ERPs and geographically separate finance teams as the PrimaTrade platform can be driven by supplier data.
Book P&L gains via early payment discounts that are managed end-to-end on the PrimaTrade platform.
Access payment extension technologies like digital bills of exchange enabling longer payment terms even in jurisdictions where underlying invoice terms may be capped.
Putting all this together delivers results that materially improve the numbers across the enterprise.
The financial benefits end up being:
Boost to P&L created where supplier early payment discounts exceed the costs of paying early.
Boost to operating cash flow as payment terms can be lengthened across the enterprise, given that suppliers have access to early payments where needed.
Reduction in operating costs because of the automation that the PrimaTrade platform brings to finance and to customs teams.
How big can these benefits be?
In absolute cash terms, the benefits can be many millions of US$ and a multiple of the costs of any implemention.
But we have found that it is the relative impact of benefits on ratios that is often a key consideration - since this is what drives the cost and availability of financing and how share prices move.
Can we forecast the benefits and their impact?
Yes.
During 2025, we have modelled the impact of a PrimaTrade implementation on many businesses for Treasurers and CFOs.
The numbers presented below show typical benefits based on one of the businesses that we modelled in the last few months:
Line item | Example Impact | Comment |
Turnover | no change | Only the payables side and relationships with suppliers are influenced here. |
Cost of sales | Reduced by 1% | Cost of sales reduces because of additional early payment discounts net of financing costs. The impact depends on the take up of the early payment offer by suppliers. |
Gross margin | Improved by 6% | The reduction in cost of goods flows straight to the gross profit and the margin. |
Operating profit | Improved by 15% | Low margin businesses experience a bigger benefit here than high margin businesses. |
EBITDA | Improved by 5% | EBITDA is generally higher than operating profit in most businesses. The cash improvement is the same but the percentage improvement is less as a result. |
Most companies have cost-reduction and efficiency initiatives. But very few of them do more than reduce costs. The key point here is that the impact of a PrimaTrade program for your suppliers creates a bigger set of improvements across a wider range of important accounting ratios because of how the benefits are delivered.
This is shown in the next section.
How benefits improve your financial ratios
We tailor our client model to fit the specifics of each client. In particular, which ratios are important varies.
A relatively standard picture - for example, for the business above - it could look like this:
Ratio | Example Impact | Comment |
Leverage (net debt to EBITDA) | Reduced by 16% | Since EBITDA is increased and net debt is reduced by additional retained earnings, this ratio can improve - often a key covenant in financing documents. |
Solvency (net debt to equity) | Reduced by 40% | Similar to the leverage ratio, additional earnings increase equity and reduce net debt. |
Free cash flow | Improved by 45% | Longer payment terms from suppliers leads to better free cash flow - noting that early payments to suppliers are made by external financiers. |
EBITDA margin | Improved by 15% | Lower cost of goods improves margins - noting that low margin businesses experience a bigger relative benefit here than high margin businesses. |
FCF (free cash flow) to sales | Improved by 40% | Stonger cash flow generation because of working capital improvements |
Net debt, FCF, solvency are all boosted by two factors in combination:
Improvements in margin and EBITDA
AND improvements in working capital
Ask us to do the calculations for you
We are happy to simulate the impact of a PrimaTrade implementation for any client.
Typically, we take last years' financials and show how they would have been different if PrimaTrade had been implemented.
This is usually a powerful element of the business case for a PrimaTrade implementation - and we are happy to do the work!
What next?
Ask us at PrimaTrade to do the work!
We can do this easily with public financials, or share your latest accounts with us under a strict NDA if you are a private company.