Supply chain financing: using cash-to-cash variables to strengthen the supply chain Wesley S. Randall Department of Aviation and Supply Chain Management, Auburn University, Auburn, Alabama, USA, and M. Theodore Farris II Department of Marketing and Logistics, University of North Texas, Denton, Texas, USA Abstract Purpose – The purpose of this paper is to show how firm financial management techniques may be used to improve over all supply chain profitability and performance. Design/methodology/approach – This paper uses a case-based approach to demonstrate how supply chain financial management techniques, such as cash-to-cash and shared weighted average cost of capital (WACC), can reduce the financial costs experience by a supply chain. Findings – This paper provides a methodology to identify and quantify the potential opportunities to increase profitability throughout the supply. Scenarios are offered that illuminate potential supply chain improvements gained by collaborative management of cash-to-cash cycles and sharing WACC with trading partners. Research limitations/implications – These financial techniques are readily available for use in collaborative supply chain structures. Practical implications – Coordinating financial management across the supply chain is a potential tool to align and improve the financial performance of collaborating firms. This method extends to the supply chain those historically firm-centric financial management concepts such as return on capital and cash flow. The impact is reduced overall cost generated by leveraging the financial strength of the entire supply chain. During economic downturns and times of tight credit proactively managing financials across the supply chain may be the only way some suppliers remain afloat. Originality/value – Two firm level financial management approaches are extended and they are adopted for use across the supply chain: cash-to-cash management; and leveraging a shared supply chain financing rate. This paper builds on the increasing body of research and practice that suggests trading firm-optimized for supply chain optimized performance reduces overall cost and improves customer value. Keywords Finance, Supply chain management, Cash flow, Supplier relations Paper type Case study Introduction Research and practice is definitive; strong supply chain collaboration leads to increased profit and improved competitive advantage. This paper builds on that foundation to demonstrate that firms that establish strong collaborative structures may benefit by adopting a supply chain approach to their financial management techniques. A supply chain financial management approach means smartly extending classic firm-oriented practices dealing with cash-to-cash cycles, cash flow, and weighted average cost of The current issue and full text archive of this journal is available at www.emeraldinsight.com/0960-0035.htm Supply chain financing 669 Received 2 February 2009 Accepted 29 May 2009 International Journal of Physical Distribution & Logistics Management Vol. 39 No. 8, 2009 pp. 669-689 q Emerald Group Publishing Limited 0960-0035 DOI 10.1108/09600030910996314