Market Perspective

What Businesses Learned Last Year, and What Trends will Define Success in 2021

February 9, 2021
The C2FO Team

The COVID-19 global pandemic caused an unprecedented shock to businesses in 2020. As entire economies shut down to contain the virus, millions of workers were unable to return to their jobs — some temporarily, some permanently.

The pandemic is far from over but already businesses have learned important lessons about adversity, resilience and opportunity that will build a platform for future growth.

What is the outlook for 2021? The following insights, many of them from accounts payable trends among European suppliers on the C2FO platform, provide a roadmap for businesses over the next 12 months and beyond.

 2020 in review

Last year was all about COVID-19. Small and medium-sized enterprises (SMEs), the lifeblood of the economy, were hit particularly hard. According to McKinsey & Co, 70% of SMEs saw their revenues decline in 2020 and more than half reported that they might not survive longer than 12 months. This is despite government assistance aimed at easing financial distress and saving jobs.

More than anything, the pandemic’s simultaneous disruptions to both supply and demand worldwide have shown the adage, “Cash is king,” to be truer now than ever before.

However, after the initial shock, the impact of COVID varied significantly by industry. The challenges faced by businesses were, therefore, very different across industries and sectors. Some industries are still suffering but others saw a recovery over the third and fourth quarters, and have momentum heading into 2021.

For example, food retailing, household appliances and logistics saw sales and revenue increase during the initial period of lockdown and are reporting continued strength in sales. Non-grocery retail suffered a fall in sales during lockdown but has bounced back and activity remains robust. By contrast, sectors including aviation, advertising and recruitment are not currently showing any recovery and face an uncertain 2021. 

Here at C2FO, the economic crash at the end of the first quarter was reflected in a spike of new users, with many buyers seeking to support their supply chains by using early payment as a tool to provide liquidity to critical or at-risk suppliers. Our data shows March was a record-setting month for net new supplier participations on our Early Payment platform, up 85% year-over-year.  

What drove this? The speed at which COVID-19 hit the economy and the ensuing impact meant many traditional financing solutions did not have the capacity to support businesses looking to secure their financial positions through the pandemic. This resulted in an accelerated adoption of more accessible fintech solutions. The sharp drop in revenue that continued until mid-May of 2020 drove thousands of businesses throughout Europe to offset their financial uncertainty by accelerating invoices via the C2FO platform.

Case Study: A Quick Way to Address Overhead

During the pandemic of 2020, a Europe-based wholesaler needed funds to finance overheads urgently. It was too short a notice to set up a factoring facility and the company was not in a position to take on debt, so it used C2FO to quickly finance the overheads. The wholesaler highlighted flexibility and simplicity as the key benefits of C2FO, which include the ability to direct funding to certain subsets of suppliers and the convenience of working from a single, secure online platform. The company now uses C2FO as its primary source of working capital.

Like that wholesaler, many companies throughout the continent now recognise the advantages that C2FO technology can provide by supporting both credit risk mitigation and working capital generation. Unlike factoring and other forms of alternative finance, companies can use the C2FO platform on-demand, without being tied into rigid contracts for facilities that they do not always need.

Looking at 2021: three key trends to define the year

What does 2021 have in store for supply chains? The vaccine rollouts have brought some optimism that this year could see a path out of the crisis – but much uncertainty remains, as a number of European countries have recently introduced new lockdowns and new variants of the virus bring additional concern. 

What’s more, the economic fallout of the pandemic is expected to continue. The European Commission predicts a 7.4% contraction in the EU economy in 2020 – with the economy not expected to recover to pre-pandemic levels for at least two years.

Looking forward, we expect three key trends to define the next 12 months:

1. ‘Winners’ will have invested throughout the crisis and will continue to invest

In the coming year, the companies that will do best are likely to be those that have invested wisely during the COVID-19 crisis – and that continue to do so. According to a McKinsey article, “History tells us that organisations that invest in innovation during a crisis outperform their peers in the recovery.”

For these forward-looking companies, reducing the risk of future disruption is likely to be a major priority. A poll of 200 global manufacturers by Bain & Company found that companies have shifted their supply chain investment goals in light of the crisis, with many of them investing to improve the flexibility of their networks (60%) and increase their resilience (41%). Only 36% saw cost reduction as a top three goal, compared to 63% that saw it as a key priority in the last three years.

In 2021, we expect to see more companies choosing to leverage their entire business ecosystems to collaborate, problem-solve, and unlock cash and margins as a network. If the events of 2020 have taught us nothing else, it is that “we are all in this together.” Innovative businesses will take a more holistic approach to their supplier and customer relationships than in previous years.

2. The focus on ESG in supply chains will continue

This year, we expect to see an even greater focus on Environmental, Social and Governance (ESG) considerations in supply chains.

Sustainability is becoming an imperative for all responsible companies. As such, buyers are paying more attention not only to their own practices, but also to their suppliers’ sustainability credentials. For example, some buyers now include ESG metrics in their supplier selection process and work proactively with suppliers to achieve sustainability targets.

Sustainable businesses are also likely to have access to more funding options – or cheaper funding options – as corporates look to reward and incentivise suppliers that demonstrate the best sustainability practices.

For suppliers, the growing importance of ESG can be a growth opportunity rather than a risk – but only if they focus on this topic now. 

The bottom line: in 2021, sustainable businesses will increase their share of wallet from customers, at the expense of unsustainable businesses.

3. Technology will change the way we work and flexibility will be key

The rise of remote working is one of the biggest changes brought by the COVID-19 crisis. Companies have adapted rapidly to this model, with technology providing the flexibility needed to change working practices and overcome major challenges. 

In 2021, we expect flexibility to become more critical than ever. Even when the crisis passes, it is likely that many workforces will keep the option of home working, or hybrid patterns that include both office and remote work.

Likewise, flexibility will be key where liquidity products are concerned. Even as we move out of the crisis in 2021, the trajectory may not be linear: as in 2020, companies may see staffing disrupted by self-isolation, while consumer behaviour may continue to be affected by intermittent restrictions, as well as by economic instability. These continued uncertainties make it imperative that companies of all sizes continue to have flexible working capital solutions on hand to utilize when a quick injection of liquidity is needed. 

In conclusion

In recent months, C2FO has seen many businesses using our products for the first time. The conclusion we draw from this trend is that more companies are seeking more flexible financial tools as they navigate their way into 2021 and beyond.

In an environment that is likely to be unpredictable for some time to come, it is essential for companies of all sizes to be able to optimise cash flow and have enough liquidity on hand to weather unforeseen developments. Companies that can access working capital solutions when they need them and on the terms that best prepare them to navigate the challenges ahead.

Suppliers can gain liquidity in different ways, but the fastest and most efficient path is often through their buyers. It’s about working together — a buyer helps to improve suppliers’ cash flow and those suppliers, in turn, support the buyer for many years to come.

Suppliers, of course, aren’t the only ones who benefit from more liquidity. Visit to learn how flexible financial tools can ease working capital management for you, your suppliers and your customers — all from a single, secure platform.

Working Capital. Working for Everyone.

C2FO provides working capital solutions for you, your suppliers and your customers.

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