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“If Cash is King, Saving Cash is Queen”

SAP Ariba Discount Management

Warren Buffet has said, “Cash is to a business as oxygen is to an individual; never thought about when it is present, the only thing in mind when it is absent.”

The Problem to Solve: For buyers, managing payment terms is important and sellers want ease and certainty to get paid faster.  In fact, a survey of suppliers found 49% would consider early payment on all invoices.

Thinking Differently About Invoices is an opportunity as invoices are not just accounting documents, rather strategic assets to improve cashflow to help buyers and suppliers achieve better business outcomes such as opening new stores, building factories, investing in research and development, etc.

SAP Ariba Discount Management helps buyers and suppliers solve the cash / cashflow dilemma by providing benefits and certainty to both.  A key element is the technology which enables an invoice to be discounted any point to the maturity date of the invoice.

The example below compares a standard / static discount of 2% 10, net 30, to examples to earn a discount at any point before the invoice is due to be paid – a win for buyers and suppliers:

Buyer Financial Benefits

  • Strengthen Procure to Pay program, generating value add beyond price reduction
  • Earn incremental early payment discounts to increase net income
  • Greater control over payables, cash, and DPO (Days Payable Outstanding – a measure of how long companies hold on to their cash)

Buyer Benefits: Social Responsibility:

  • Strengthen suppliers ability to manage their cash needs which helps mitigate risk
  • Improve brand equity by programmatically injecting cash into the supply chain


Suppliers Benefits:

  • Obtain cash flow on demand, with choice over which invoices are accelerated
  • Ease of payment acceleration (when compared to other options)
  • Visibility and certainty to timing of payment

 

To learn more about SAP Ariba Discount Management, the following links are available:

 

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