Fusion 2014: Lessons Learned from Advanced Discount Management

Lessons Learned from Advanced Discount Management

Markus Ament,Chief Product Officer

Taulia

I. Cash Flow Challenges for Buyers and Suppliers

II. The Benefits of Dynamic Discounting and Supplier Finance

III. Best Practices and Tips to Maximize Discounts Captured

IV. Real World Examples of How to Manage Segmentation Brackets Within Your ERP

V. Solution Demonstration

VI. Questions

Agenda

Transforming Your Payables Department

Imagine a world where…

Supplier inquiry calls become a thing of the pastBuyers have a lean invoicing, payables & discounting process trimming millions off the bottom lineAutomating and maximizing supplier discounts is finally achievable

Finally Complete the AP Automation Journey…While Realizing Significant Financial Benefit

There Is a Fundamental Inefficiency in Today’s Supply Chain

Buyers are Holding Record Amounts of Cash Generating Low Returns

Small Businesses Have Limited Liquidity and High Cost of Capital

Traditional Supply Chain Connectivity Creates Delays in Supplier Payment

Record Amount of Cash Earning Low Returns

Buyers Have Excess CashU.S. Non-Financial Companies’ Cash & Liquid Assets

Low Return on Cash U.S. Interest Rate – 10-Year Treasury Rate

($ in tn)

While Their Suppliers Struggle to Stay Afloat

Factoring market is growing rapidly and exceeds $2.9 trillion

Global Factoring Market in Trillions*

2006 2007 2008 2009 2010 2011 20121

1.2

1.4

1.6

1.8

2

2.2

2.4

2.6

2.8

3

1.54

1.77 1.81 1.75

2.25

2.752.91

* Source: http://fci.nl/about-fci/statistics/total-factoring-volume-by-country-last-7-years

TYPE: INTEREST:

Credit Card 18%

Factoring 20-40%

• Due Diligence Effort

• Few Companies Qualify

• Exceptionally Expensive

Lack of Connectivity Causes Delay in PaymentsSu

pplie

rsBu

yers

Inefficient Buyer-Supplier Connections Lead to No Visibility into Invoice Process

APPROVED INVOICE

10 DAYS

Average time to approve a valid invoice

Source: Taulia Analysis Source: REL/Hackett Group

Average U.S. payment terms

55+ DAYS

Common Challenges within Payables Process

No visibility into the invoice process

Unnecessary invoice

status and inquiry calls

Missed early payment discount

opportunities

AP Depts. drowning in paper

High cost of

manually processing

invoices

Never-Ending Friction Between Buyers and Suppliers

SUPPLIER Invoices Customer

BUYER Approves Invoice on

Day 5

BANK

Invoice-Net 60

Buyer Earns 0.75% APR until Due

Date

Suppliers Factor at 20+% APR

1.

2.

3.

Banks Benefit from Payment Inefficiency

Payables as an Opportunity for Revenue

0 DAYSinvoice

10-15 DAYSapproval

60 DAYS due date

OPPORTUNITY

AVERAGE PAYMENT TERMS (DAYS)

Anheuser-Busch

Hertz

Apple

Industry Average

120 DAYS

60 DAYS

45 DAYS

56 DAYS


II. The Benefits of Dynamic Discounting




VI. Questions

Agenda

The Win-Win Solution that Generates Revenue

Enables Buyers to save money and improve return on cash by paying suppliers early

Enables Suppliers to access less expensive financing alternatives by accepting time-variable Dynamic Discounts

Forget the cliff. Automate discount capture.

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0%0 10 Days 20 Days 30 Days

$

2% 10 Net 30

“Hit-or-Miss Discount”3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0%0 10 Days 20 Days 30 Days

$

$

Sliding Scale Discount

Antiquated Discounting Dynamic Discounting

Why Suppliers Choose Early Payment Discounting

Allow suppliers to get paid sooner

Payment dates are well under industry averages

Discount rates are less expensive than alternative forms of financing

More convenient than funding alternatives

Better balance sheet Helps to meet quarterly targets






VI. Questions

Agenda

Five Factors for Maximizing Global Discounting

Gain cross-functional alignment1

Best practice terms policy2

Best in class tools3

Ongoing change management4

Architecture for maximum flexibility5

1. Gain Cross-Functional Alignment

Improve working capital management

Connect and streamline processes internally

Create an integrated and centralized way to manage spend, suppliers and process efficiency

Pay the RIGHT suppliers, the RIGHT amounts at the RIGHT times

ONE SHARED

GOAL Accounts Payable

Treasury Procurement

IT

2. Best Practice Terms Policy

Did you know?Better practices can improve results 20-40%*

*Tom Glassanos, Bavelos Group Research, 2013

The deployment of payment terms and supplier strategies that align with cash management, DPO, and financial supply chain goals

One size (term) does not fit all

Understand when to use corporate cash, bank cash or third-party cash

3. Best in Class Tools

Seamless integration into your ERP

Supplier segmentation through your ERP or convenient web based platform

AP automation helpful for straight through processing

Flexible funding models to meet the needs of the entire supply chain

Did you know?AP Automation can improve results 10-30%*

*Tom Glassanos, Bavelos Group Research, 2013

4. Ongoing Change Management

Supplier preferences change

Cost of capital changes

Internal policy and expectations change

5. Architecture for Maximum Flexibility

ERPERP

WorkflowWorkflow

Supplier Financing Module

Supplier Financing Module

Leverage supplier financing with any combination of new or existing portal and workflow strategies for maximum flexibility

eInvoicing Network

Pay Me Early

Vendor Portal

Pay Me Early

Propriety Portal

Pay Me Early

What Makes the Difference?

Seamless integration into your ERP1

Providing 100% visibility of AP information to 100% of suppliers2

Compatibility with all AP automation solutions and ability to coexist and integrate with other portals

3

4 Enabling Advanced Discount Management on 100% of spend






VI. Questions

Agenda

“Taulia has saved us more money quicker than anticipated.”

- Finance Dept.

2008 2009 2010 2011 2012 201305

101520253035404550

Taulia Deployed in 2011

$46M

$31.4M

$10M$5.8M$3.9M

$120M in Discounts

$43M

UtilityLarge U.S. Utility Adds Dynamic Discounting in 2011, And Early Payment Discounts Skyrocket!

UtilityIn addition, as eInvoices Increase, Payment Error Rate Decreases,

Clerical FTE’s Decrease and Productivity Increases

2002 2005 2008 2011 20120

100,000

200,000

300,000

400,000

95K178K

226K

312K371K

eInvoices

2002 2005 2008 2011 20130.0000%0.0020%0.0040%0.0060%0.0080%0.0100%0.0120% 0.0120%

0.0050%0.0040%

0.00008%0.00006%

Payment Error Rate

2002 2005 2008 2011 201305

10152025 24

1612

86

Clerical FTE's

2002 2005 2008 2011 20130

500

1000

1500

121206 337

714

1138

Invoices / FTE / day

Live since late 2013 1,500 Suppliers in Scope

[others are independent retailers that aren’t

applicable]

1,235 Suppliers Invited and 532

Suppliers Enrolled

43% enrollment rates within weeks (without policy)

.

Captured $250,000 Discounts Captured

in 3 months

[80% Canadian, 20% U.S.]

Trending towards $110,000 per month

Telecomm

Leading Telecomm saw immediate ROI

Telecomm

Three Month Engagement Snapshot

9/10/1

3

9/14/1

3

9/18/1

3

9/22/1

3

9/26/1

3

9/30/1

3

10/4/1

3

10/8/1

3

10/12/1

3

10/16/1

3

10/20/1

3

10/24/1

3

10/28/1

3

11/1/1

3

11/5/1

3

11/9/1

3

11/13/1

3

11/17/1

3

11/21/1

3

11/25/1

3

11/29/1

3

12/3/1

3

12/7/1

3

12/11/1

3

12/15/1

3

12/19/1

3

12/23/1

3

12/27/1

3

12/31/1

3

1/4/1

4

1/8/1

40

500

1000

1500

2000

2500

3000

Vendors InvitedVendors EnrolledInvoices Submitted

87% of I N V I T E D S U P P L I E R Senrolled

WITHIN 6 MONTHS

90% of enrolled

suppliers actively use the portal

Live in late October 2011Internal personnel eager to

adopt the new system

BottlerEnrollment and Engagement Prove Program

Success

I. Current State of the Invoicing & Payables Process

II. Moving from Traditional Invoicing to Full Electronic Invoicing

III. Getting Suppliers On Board: 5 Supplier Value Propositions

IV. Supplier Discounts & Turning Issue Into Opportunity

V. Real World Success Stories

VI. Demonstration

VII. Questions

Agenda

Questions?

Get in touch with us!

Markus Ament

Chief Product Officer, Taulia

Office: 415-376-8280 x83

E-mail: [email protected]

Twitter: @maex242

Fusion 2014: Lessons Learned from Advanced Discount Management

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