Dive Brief:
- Dick’s Sporting Goods will offer early payments to vendors as part of a broader supplier diversity initiative, the retailer announced last week.
- The company is expanding its partnership with working capital platform C2FO to accelerate supplier payments on chosen invoices. Dick’s will self-fund the early payments, and in exchange, will ask vendors for a “minimal discount,” according to the release.
- The partnership is part of a larger diversity push by Dick’s to spend $300 million annually by 2025 with diverse-owned and operated businesses.
Dive Insight:
Dick’s aims to build relationships with diverse suppliers by providing minority-owned businesses access to working capital.
Offering early payment programs to suppliers can help reduce financial strain. But for diverse-owned businesses that often face difficulty accessing credit, early payment plans can bridge a crucial financial gap.
The existing financial system has “systemic biases attached to the underwriting process,” which fuel underrepresentation and underfunding, C2FO VP of Client Success Jeremy Colwell said in an email.
Black-owned firms are 7% less likely to be approved for financing at banks overall compared to white-owned firms, a 2019 Federal Reserve report found.
"One of the challenges that diverse-owned and operated businesses face is access to working capital," Ramon Catania, director of supplier initiatives for the sporting goods retailer, said in the release. “With C2FO, suppliers who work with us will have access to cash sooner to fund their day-to-day operations or expand their business.”
The offer is through C2FO’s Opportunity Marketplace, an early payment program launched last year that offers underserved businesses significantly lower fixed interest rates. “So far, in 2022, C2FO has accelerated more than $2.7 billion in early payments to diverse-owned businesses worldwide,” Colwell said.
Other retailers are also trying to scale up supplier diversity initiatives by investing in diverse-owned businesses or offering early payments. In 2021, technology company HP announced an expanded early payment plan with C2FO, while Best Buy committed to spending $1.2 billion with diverse suppliers by 2025.
Suppliers are companies’ “most important business assets,” Colwell said. “When companies help their suppliers thrive, they solidify those relationships, can achieve their supply chain diversity goals, improve margins and gain better returns on cash.”
