Sometimes, working capital management can feel like a tug-of-war between buyers and sellers. While you hold on to cash for decent returns, your suppliers try to pull it their way for liquidity. Early-payment discounts could end the tussle, but they get lost in a sea of paper invoices, or ignored when someone thinks it's smarter to play with float. But you end up with only measly cash returns, and pay suppliers more than necessary. Meanwhile, their struggles add risk to your supply chain.
There is a better way:
Ariba Discount Professional.
This cloud-based solution makes it easier for you to bolster your supply chain by funding suppliers' short-term cash flow needs. You can fully automate discount management from initial offer to agreement, including deals involving prorated or dynamic discounting. Automate settlement processes, too, making sure everything happens on time. And with Ariba Discount Professional's tight integration with the Ariba Network – the world's largest trading community – supplier participation, management, and collaboration are a breeze.
Look at what you win by creating such alliances with your suppliers: lower costs, maximized discount value, double-digit returns on your cash, and a stronger supply chain. With no tugging at all.
Learn how you can...
Earn better returns on working capital.
For many organizations, prevailing cash management strategies involve trying to capture interest off of the float. But leading enterprises recognize that a mutually beneficial early-payment discount program, efficiently and effectively implemented, is the right strategy for maximizing returns on cash. That's because playing the float typically yields about 1% return, while taking advantage of early-payment discounts, say at terms of 2/10 net 30, earns an annualized percentage rate of 36.5%. Automation of more flexible discounting strategies is the key, enabling you to capture and maximize discount value each and every time.
Employ more flexible discounting strategies.
Standard early-payment discount terms are great, unless you miss the due date. Ariba Discount Professional gives you a lot more options. Like permanent, pre-negotiated discounts that are applied automatically until contract terms end. Or standing, prorated terms that are activated by mutual agreement anytime during the term, using a sliding scale. And dynamic discounting automatically presents your offers to suppliers whenever an invoice from a particular supplier or group of suppliers is approved. At that point, the supplier has the self-service ability to accelerate payment if and when they need, simply by clicking a button.
Secure discounting with minimal effort.
That's the whole point of automation, isn't it? With Ariba Discount Professional you can eliminate slow, error-prone manual processes and accelerate the entire cash conversion cycle, saving time and money for you and your suppliers. For example, with our “Set It and Forget It” discounting, automated collaboration processes enable you to take advantage of discounts as soon as an invoice is approved. You simply set parameters once and capture the savings. And you can finally eliminate time-consuming supplier inquiries with automated notifications about discount offers and approvals.
Easily get suppliers on board.
Suppliers need to know that discount agreements will lead to their getting paid as promised. So the first step to enrolling them is making sure your invoice and payment processes are reliably efficient. Ariba Discount Professional's automation takes care of that. Now you can entice suppliers with the option to bypass costly bank liquidity financing. The Ariba Network makes enablement easy. Then, an intuitive user interface and discount management dashboard provide suppliers with control over cash acceleration options and visibility into payment status, improving their planning and forecasting. What's not to love?
Better manage supplier information.
All suppliers are not created equal when it comes to willingly participating in early-payment discount agreements. You need to be able to organize and categorize your suppliers based on their predisposition to discounting. This way, you can make fast buying decisions informed by your pre-determined best opportunities for discounting. And while you reduce your working capital needs, you can also set formulas and instructions to initiate and approve discounting only when you're assured of earning your required internal rate of return.
In the Ariba Commerce Cloud, working capital management becomes collaborative finance management. Buyers and sellers come together to employ mutually beneficial solutions for invoice management, payment management, receivables financing, and much, much more. Take some time to explore your options, or download our data sheet.
Request more information about Ariba Discount Professional or other working capital management solutions.
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