Covid Crisis: Petrobras Launches Financial Platform for Suppliers’ Receivables

RIO DE JANEIRO, BRAZIL – Given the deep crisis that the oil industry is facing in these pandemic times, the ones suffering the most are production chain suppliers that, for the most part, do not have the financial muscle of large multinationals.

In this scenario, Petrobras announced on Tuesday, November 24th, the launching of a platform that permits suppliers to anticipate invoices for goods and services already provided, that is, suppliers can submit and receive their invoices earlier than the normal payment deadline, paying low interest rates for easing their cash flow.

The anticipation of receivables is common in the market, but depending on the financial institution and the credit risk of the company requesting the advance, rates can range between 1.5% and 2% per month.

The new platform called “Mais Valor” (More Value) will broaden the access of small and medium-sized companies that directly supply Petrobras with working capital operations at more competitive rates along with partner banks, using the oil company’s payment risk. About 10,000 suppliers will be able to join the program.

Ricardo Besada, Petrobras’ executive finance manager, explains that the company already had a similar project, which was ultimately improved. The pandemic has expedited the launching of ‘Mais Valor’, according to him.

“Before, the banks perceived the supplier’s risk. We managed to correct imbalances and now the financial institution will perceive Petrobras’ risk”, said the executive in an interview with EXAME.

In the platform, founded in partnership with the Monkey Exchange startup, transactions will occur through a so-called reverse auction, which is won by the financial institution that bids with the lowest interest rate.

Only Petrobras’ direct suppliers may take part in reverse auctions, with minimum invoices of R$1,000 each. There is no upper limit. “The program has the potential to anticipate up to R$3 billion per month in invoices, but if the participants’ appetite is higher, this value may be even higher”, states Besada.

Rodrigo Ugarte, executive supply manager, explains that amid the crisis triggered by the pandemic, one of Petrobras’ priorities has been the sustainability of its supply chain.

“The concept was being worked on internally, but it gained momentum this year. Although the SELIC [basic interest rate] is at an all-time low, the cost of capital in Brazil is still more expensive than abroad and this program will provide greater support to the national chain.”

The executive stresses that this is not an advance, since Petrobras has already received the good or the service. “Suppliers simply submit the invoice before the agreed deadline and Petrobras will pay the financial institution. This provides greater financial breathing space to small and medium-sized companies”.

Source: Exame