Ariba Knowledge Nuggets - Cloud Commerce for Managing Cash
Ariba Discount Professional Ariba Knowledge Nuggets What is the Ariba Commerce Cloud?Managing Cash—What the Commerce Cloud can do!Your business growth relies on the free-flow of cash. Yet too much working capital can get clogged up inreceivables and payables up and down your supply chain. That can create risks you dont want,for you and your trading partners. Of course, there are ways to collaborate with your cash-strapped partnersto set it free, like dynamic discounting or receivables financing. But too many companies rely onsluggish, paper-based finance management processes, making it impossible to get the visibility andcommunications youd both need to make fast, informed decisions and achieve consistent results.With Ariba, you can unclog your working capital management processes to give your organization and yoursupply chain significant competitive advantage. Whether youre a buyer trying to extend your DPO (DaysPayable Outstanding), or a seller eager to shorten your DSO (Days Sales Outstanding) , your objectives nolonger need to be mutually exclusive. Not when the Ariba Commerce Clouds automated solutions can deliverimproved liquidity and mutually beneficial returns. So get rid of the paper and inefficiencies that reduce yourcash flow to a trickle. Ariba has solutions that you may or may not be taking advantage of:Ariba Invoice Management • Get rid of paper invoices and whats left? 70% lower costs, more discounts, and happier suppliers.Ariba Payment Management • Finally, a cost-cutting, risk-reducing online payment solution that works for each and every one of your suppliers.Ariba Discount Professional • Stop overpaying for stuff, and earn healthier returns, when you manage cash with your suppliers in mind.Ariba Receivables Financing • Leverage the Ariba Network to convert your receivables to cash at attractive rates. Not interested…..stop right here! But if you have ever felt like you were leaving money on the table by missed discounts,supplier programs that are lacking, over-payment for what you buy, or missed opportunities due to your cash being tied up…..turn the page. I am going to tell you a little bit about the solutions we have to suit your business challenges. Let’s take the… “Wish we could…..” conversations to the next level.
Ariba Invoice ManagementGet rid of paper invoices and whats left? 70% lower costs, more discounts, and happier suppliers.Think of all the time your AP staff spends processing paper invoices: matching them with POs and goods receipts,correcting errors, and fielding supplier inquiries. Still, you can see only so far into invoice processes, leaving youexposed to risks like overlooked billing discrepancies, missed discounts, and overpayments. The thing is, you alreadyknow theres a better way: e-invoicing. The challenge is figuring out how to get all your suppliers on board.The Ariba Invoice Management™ solution can help. It’s the only “smart” e-invoice solution integrated with the AribaNetwork—the world’s largest business commerce network. Odds are, many of your suppliers are already part of theAriba Network. And with no technical barriers for participation, it is quick and easy to enable all of your suppliers who arenot already on the system.With fast and accurate smart invoice processing, greater visibility and control, improved contract compliance,and stronger supplier relationships, you can drive: • Total supplier participation: Until now, the high cost and technical difficulties associated with custom-built or enterprise portal solutions were obstacles to implementing an automated, global e- invoicing solution. No longer. Your suppliers that are not already participating in the Ariba Network can be enabled quickly and easily using a range of automated supplier enablement tools and connectivity options best suited to their specific level of invoice activity. These include the Ariba Supplier Portal, accessible with just a browser and an Internet connection. And if any suppliers insist on sending paper invoices, you can scan and convert them with Ariba Invoice Conversion Services. • Faster invoice approval cycles: Processing paper means costly delays. Speed things up by improving invoice quality. Errors fall dramatically when you collaborate with global suppliers over the Ariba Network and employ smart network validation at the time of submission. About 98 percent of invoices are then automatically posted via straight-through, touchless processing. Any invoices with errors or omissions are rejected and routed for efficient handling. With compressed invoice approval cycle times, your team leverages its speed and efficiency to secure additional discounts. • Fewer supplier inquiries: With Ariba Invoice Management, you provide your suppliers with self- service tools that eliminate payment status phone calls. Online dashboards centralize all documents and communications, so your suppliers can view approvals, payments, rejected orders, and more. This readily available information helps them with cash forecasting and resolving any disputes. Make it easier for your partners to work with you, and you’ll enjoy the benefits that come with stronger vendor relationships. • 100 percent on-time payment performance: While fully automated invoice management means you can achieve virtually 100 percent on-time payment performance, it doesn’t mean you have to compromise your DPO management. Instead, think about extending DPO by routinely agreeing to pay invoices on their due date, rather than upon receipt. You needn’t worry about late payment fees—automation avoids them. The key here is consistency: if your suppliers decide they need payment sooner, they’ll be motivated to offer discounts in exchange. And that’s a nice way to support Procurement’s efforts to negotiate new supplier contracts. • Reduced supply chain risk: Greater visibility, enhanced connectivity, and improved collaboration all contribute to stronger supplier relationships. By implementing a more-efficient invoice process, you can help your suppliers reduce their Days Sales Outstanding (DSO). And by supporting their working capital management efforts and working more closely in mutually beneficial ways, you can help keep your suppliers strong and viable.
Ariba Payment ManagementFinally, a cost-cutting, risk-reducing online payment solution that works for each and everyone of your suppliers.With the Ariba Invoice Payment solution we offer, you can extend your existing ERP or financial system to create acollaborative e-payment platform—one that supports the needs of all of your suppliers, streamlines payment procedures,and reduces processing costs by enabling: • Maximum supplier participation: ACH programs often stall due to low supplier participation, but when you leverage Ariba Payment Management for supplier enablement, you can quickly achieve up to 100 percent supplier participation. Whether your suppliers number 200 or 2,000, Ariba has the staff, processes, methodologies, and technologies to contact your suppliers on your behalf, explain the benefits of the Ariba Network, and give them access to a fast, automated enrollment and enablement process. If any supplier isn’t ready to enroll, we have the means to accommodate their needs, too. • A more-productive AP team: First-generation ACH programs forced AP teams to assume the high cost and risk of maintaining supplier bank accounts. These teams have also fielded supplier inquiries about payments and remittance reconciliation—activities that typically consume 30 percent of their time. Ariba Payment Management removes these burdens. Your suppliers can now maintain their own bank account information with self-service tools, and view real-time payment status via their supplier portal—freeing up your team to focus on more- strategic initiatives. • A way to avoid fraud and late payment fees: When you rely on paper checks and paper invoices, you’re more exposed to fraud and more likely to incur late payment fees. Eliminate these risks by collaborating with and paying suppliers over Ariba’s secure business commerce network. Integrate Ariba e-invoicing with your Ariba Payment Management solution, and use automated tools to validate and handle invoices. Any invoices with errors or omissions are rejected and returned to suppliers for correction and re-submission. Then electronically issue virtually all payments on time via straight-through, touchless processing. • No paper check costs: You need to eliminate every unnecessary cost, and that includes paper check costs. With Ariba Payment Management, you remove those costs by delivering e-payments to your suppliers through our global trading network, where more than 300,000 suppliers connect and collaborate for better commerce. Augment your solution with Ariba e-invoicing, and you can eliminate the costs of handling paper invoices, too. • Better DPO management: There’s an art and a science to managing and maximizing DPO, and e-payment automation through Ariba Payment Management helps you master them. More efficiently than ever, you can leverage electronic payments to balance cash preservation with early-payment discount capture. Equally as important, the platform’s collaborative tools help keep your suppliers informed—and your relationships strong— as you make strategic decisions in support of your cash flow objectives.BenefitsAriba Payment Automation: • Eliminates supplier inquiries on payments and remittance reconciliation • Ensures that remittances don’t get lost or incorrectly correlated to invoices • Eradicates paper, along with check printing and processing costsAriba Payment Pro: • Increased ACH supplier penetration • Ariba-maintained connections with banks, eliminating the need for your IT department to establish and manage connections with banks for ACH payments • Real-time payment status monitoring • Choice of ACH format (CTX, CCD, or CCD Plus) to drive down ACH costs • Supplier self-service functions that eliminate the need for your AP staff to maintain supplier information in back-office systems and handle time consuming supplier inquiry calls • Reduced risk associated with Sarbanes-Oxley compliance, as suppliers can safely maintain their own bank account information
Ariba Discount ProfessionalSometimes, working capital management can feel like a tug-of-war between buyers and sellers. While you hold on tocash 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 its smarter to play with float. But you endup with only measly cash returns, and pay suppliers more than necessary. Meanwhile, their struggles add risk to yoursupply chain. Traditional working capital management strategies can strain trading partner relationships. As buyers focuson maintaining or extending Days Payable Outstanding (DPO) and increasing cash returns, suppliers often faceextended Days Sales Outstanding (DSO) and cash flow pressure.Benefits • Manage payables, cash, and DPO with greater precision, control, and visibility • Maximize returns and reduce investment risks on your short-term capital • Enforce pre-negotiated contracts and discount terms established by procurement • Optimize discount penetration across targeted suppliers, spend, and invoices • Strengthen supplier relationships and their financial stability with innovative tools offering greater cash visibility and liquidityResults (Customer Example)With Ariba Working Capital Management Solutions, the world’s largest sports equipment company: • Increased early payment discount capture from 35% to > 90% • Increased supplier discount participation by 20% and average discount to 1.5% (24% APR) • Captured dynamic discounts on 4% of targeted spendEarn Better Returns on Working Capital:For many organizations, prevailing cash management strategies involve trying to capture interest off of the float. Butleading enterprises recognize that a mutually beneficial early-payment discount program, efficiently and effectivelyimplemented, is the right strategy for maximizing returns on cash. Thats because playing the float typically yields about1% return, while taking advantage of early-payment discounts, say at terms of 2/10 net 30, earns an annualizedpercentage rate of 36.5%. Automation of more flexible discounting strategies is the key, enabling you to capture andmaximize discount value each and every time.Employ More Flexible Discounting StrategiesStandard early-payment discount terms are great, unless you miss the due date. Ariba Discount Professional gives you alot more options. Like permanent, pre-negotiated discounts that are applied automatically until contract terms end. Orstanding, prorated terms that are activated by mutual agreement anytime during the term, using a sliding scale. Anddynamic discounting automatically presents your offers to suppliers whenever an invoice from a particular supplier orgroup of suppliers is approved. At that point, the supplier has the self-service ability to accelerate payment if and whenthey need, simply by clicking a button.Secure Discounting with Minimal EffortThats the whole point of automation, isnt it? With Ariba Discount Professional you can eliminate slow, error-pronemanual 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 takeadvantage 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 andapprovals.Ariba Discount Professional™: Comprehensive discount management features fully automate the process of offering,negotiating, and agreeing on early payment terms with your suppliers, and include:• Supplier groups, to easily manage sets of suppliers and related spend for discounting all of the time, some of the time, or never according to your business requirements• Invoice automation to capture virtually 100 percent of pre-negotiated early payment terms and contracts• Prorated discount terms -Capturing discounts after the discount due date on a sliding scale (e.g., “2%10 Net 30 Pro”) gives you a two percent discount for paying within 10 days of the invoice date, or a prorated discount rate over the remaining days. - Ariba also offers the industry’s only sliding-scale term that takes full advantage of invoice automation and trading partner collaboration over the Ariba Network. For example, “3% Net 30 Pro” is a true time-value-of- money term that offers a 36.5 percent APR regardless of when the invoice is paid over the life of the term.• Dynamic Discounting lets suppliers control the acceleration of payment on approved net term invoices (e.g., Net 60) in exchange for a discount. You control the internal rate of return, amount of cash to use, and which suppliers to include in the program.
Ariba Receivables FinancingEver feel like cash is a little hard to come by? Thats not surprising, with your customers holding on to payments longerand longer. And with banks reluctant to lend, borrowing rates are getting expensive, too. There is an alternative, youknow. And its available when you start thinking differently about the value tied up in your accounts receivables.Working through the Ariba Network, you can engage with a global network of capital providers that will bid on yourreceivables through competitive auctions. You retain complete control over your cost of capital and cash flow. Aribaspartnership with The Receivables Exchange (TRE) paves the way, providing key advantages in terms of speed andrates. Normally, payment terms on your accounts receivable can hold up cash for 45 to180 days, or more. With AribaReceivables Financing, you can turn those receivables into cash in as few as two days.How This WorksChoose the invoices to auction, totaling at least $10,000. Set the parameters – auction duration, minimum advanceamount, and maximum fee youll pay. Through the Ariba Network, your invoices are posted directly from your ERP oraccounting system to the TRE platform. There they can be entered into an auction that you can observe in real-time. Thecapital provider that submits the best bid within your parameters wins. Your advance is wired to you within one businessday of the auction. When your customer pays on their due date, TRE remits to the capital provider the amount you wereadvanced, plus the amount of the discount fee. You get paid the remaining balance.Why This is Better Than FactoringWith TRE, there are no requirements for personal guarantees or all-asset liens on your balance sheet. No one notifiesyour customers of the transaction; all communications flow through you. You can post as few or as many receivables asyou like, as long as you meet the $10,000 auction minimum. You can have as many auctions occurring simultaneouslyas you want. You specify minimum advance and maximum fee parameters, and are only obligated to accept bids thatmeet or improve on them. And there are no hold ups: you get your advance the next business day after the auctioncloses.The Advantages of Working Through AribaAribas Cash Optimizer dashboard gives you a single point of integration between the Ariba Network and TRE. Withinthe system is a growing network of third-party capital providers that trust the Ariba brand and are ready to competitivelybid on your receivables. Because your invoices flow through the Ariba Network – the worlds largest business commercenetwork – they are considered valid, low-risk documents. This can mean faster processing and more advantageousdiscount rates. Whats more, the Ariba Network is part of the Ariba Commerce Cloud, where youll find an onlinecommunity of peers and thought leaders with whom you can collaborate and share best-practice tips.Interested in more information?Contact me today to talk through the eligibility requirements and I can put you in touch with an Exchange associate toanswer questions and provide more information.By participating in the worlds first electronic marketplace for receivables financing, you can quickly tap the liquiditylocked in your accounts receivable while retaining complete control. With unprecedented flexibility over their sale, youcan grow your business when and how you see fit.But thats not all youll find in the Ariba Commerce Cloud. At your fingertips is a comprehensive set of market-leadingsolutions to help you with every aspect of B2B commerce, whether you need additional help with collaborative financemanagement, sales acceleration, or spend management. This is the Ariba Commerce Cloud! Commerce is simply better with Ariba technology, whether youre looking to drive sales, control spending, or manage cash.