Costco Wholesale


costco warehouse shelves

As the world’s third-largest retailer, and a Fortune 500 company, Costco Wholesale is a multi-billion-dollar organization that operates warehouse club operations across the globe and maintains a rich and diverse global supply base.

In recent years, Costco recognized a challenging working capital environment. Specifically:

• The loan environment for SMBs had been difficult since the financial crisis

• Sources of cash and other alternatives were expensive for Costco suppliers

• Costco’s investment yields on treasuries, commercial paper and bonds were at all-time lows 

This case study illustrates Costco’s strategy in providing a working capital solution for its suppliers, the criteria Costco used to choose C2FO and the overall results generated.

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The Challenge

In seeking a new finance program for its suppliers, Costco had the following goals:

  • Improve supplier relationships while reducing costs and risks throughout the supply chain

  • Use working capital in a more efficient manner

  • Reduce internal costs and improve returns on short-term investments 

  • Minimize the use of internal resources and generate a fair return on cash

  • Provide a program that appeals to most suppliers and meets their funding needs

After exploring options that included invoice factoring and creating an internal program, Costco chose to move forward with a dynamic discounting solution with C2FO.

costco worker

Costco Working Capital Flows Growth

Bar chart showing positive growth

Cumulative Supplier Participations

line graph showing increase from 10,000 - 80,000 over a 6 year period for 186% annual growth

The Results

Cash Flow, Delivered — Within five years, early payments to Costco suppliers through C2FO grew a cumulative 186%.

Days Paid Early — Costco suppliers that use C2FO receive early payment by an average of 22 days

Supplier Adoption — Supplier participation in the Costco Early Payment Program continues to increase, most recently growing by 141% year-over-year.

Optimized Income — The program has generated billions of dollars in capital flows for Costco suppliers, while providing Costco with significant income generation, increased gross margin, and a 400 to 500 bps increase in treasury yield.

“It’s not often you have an opportunity to make a fundamental change in the way business is conducted. Our partnership with C2FO is a great example of what can be accomplished when thoughtful, ethical organizations are willing to challenge the status quo.“

– Joseph E Grachek III, VP Merchandise Accounting Controller

To learn how C2FO’s working capital solutions can benefit your company and supply chain visit: