Sweet Notes on Supply Chain Finance

Big Lots Treasurer Jared Poff rolls out financing option for suppliers.

Big Lots' Jared PoffAnyone who suspects that finance types can’t rock and roll should talk to Jared Poff. The treasurer and vice president of Big Lots, a $4.9 billion closeout retailer, has a side gig playing keyboards and auxiliary percussion with the Debits, a rock and roll cover band composed of long-time friends with whom he used to work in finance at another retailer, Limited Brands.

Jamming on the piano is “a good release,” Poff says, from the rigors of his day job, not to mention those involved in raising four young sons with his wife. Still, playing in the band has its parallels to a treasurer’s role. Wrong notes stand out, while true ones blend to make the group even better.

Poff has hit several sweet notes for Big Lots since joining the Columbus, Ohio-based company seven years ago. When he arrived, Big Lots had debt outstanding, no share repurchase program, and cash tied up in the accounts payable line of the balance sheet.

Since Poff arrived, the company has improved on all three counts: Big Lots now has an unsecured multi-year revolver rather than permanent debt; it has repurchased 45% of its outstanding shares; and it’s negotiating competitive payment terms with vendors, aided in part by a new initiative in supply chain financing that Poff spearheaded about five years ago. Poff is also leading the process of rolling out a paycard to store employees, which should help lower administrative costs.

Poff’s push to offer supply chain financing to vendors began soon after he joined Big Lots from Cardinal Health, with a comprehensive review of the company’s supply chain financials. 

Big Lots had a bit more cash tied up in accounts payable than was desirable, and management wanted to bring the company into line with market norms. Half of Big Lots’ suppliers are closeout vendors, while the rest are repeat vendors who provide seasonal decorations and furniture, and Poff determined that a supply chain financing program could help the repeat suppliers, especially those located overseas that sometimes don’t have ready access to capital.

No supplier is strong-armed into using the program, but it is part of the negotiations when it comes time to discuss payment terms, which has helped improve Big Lots' balance sheet. And “it’s resonated very strongly with import vendors,” Poff says. “It gives them another reason to want to do business with Big Lots.”

The program represents a small portion—about $150 million—of Big Lots’ $2.5 billion annual accounts payable line, but Poff says he expects that share to grow as vendors realize the benefits.

Another initiative Poff is leading is the replacement of paper paychecks with Visa debit cards, to lower the administrative costs of the overnight mailing of checks to a "sizable" subset of Big Lots' 40,000 employees, working in 1,405 stores in 48 states, who have opted out of direct deposit.

“We just want it to be electronic, so we can get out of the paper check business,” Poff says. He expects to start realizing the benefits, starting with lower mailing costs, soon after the project is completed this summer.

Asked what he likes best about his job, Poff says he appreciates that Big Lots is a “very lean” organization, which allows him to have a “significant amount of responsibility and exposure. It’s challenging, but rewarding.”

Just like jamming in the band.

 

See Treasury & Risk’s complete 2011 list of the 100 Most Influential People in Finance here.

 

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