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IoFM: Transform Your Payables into a Revenue Generator

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IoFM: Transform Your Payables into a Revenue Generator

  1. 1. Transform Your Payables Process into a Revenue Generator… Guaranteed. Presented By: Matt Wright, VP Client Services, Taulia
  2. 2. Fundamental Inefficiency in the 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
  3. 3. Record Amount of Cash Earning Low Return Buyers Have Excess Cash U.S. Non-Financial Companies’ Cash & Liquid Assets Low Return on Cash U.S. Interest Rate – 10-Year Treasury Rate ($ in tn) 0% 2% 4% 6% 8% 10% 1990 1995 2000 2005 2010 $0.0 $0.5 $1.0 $1.5 $2.0 1990 1995 2000 2005 2010
  4. 4. Suppliers Have No Access to Financing Suppliers Face a Financing Gap and Predatory Costs of Capital Traditional Supplier Finance Only Serves the Largest Suppliers Banks Continue to Enforce Strict Lending Requirements “Long-tail” Suppliers Limited to Factoring, P- cards and Other Expensive Forms of Finance
  5. 5. Lack of Connectivity Causes Delay in Payments SuppliersBuyers 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
  6. 6. Banks Benefit from This Inefficiency SUPPLIER Invoices Customer BUYER Approves Invoice on Day 5 BANK Invoice-Net 60 Buyer Earns 0.75% APR until Due Date Suppliers Borrow at 20+% APR 1. 2. 3.
  7. 7. Common Challenges within Payables Process No visibility into the invoice process Unnecessary invoice status and inquiry calls AP Depts. drowning in paper High cost of manually processing invoices Missed early payment discount opportunities
  8. 8. Buyer / Supplier Pain Points Why do supplier inquiry calls take up most of my time? Am I missing out on supplier discount opportunities? Is there a better way to optimize working capital? Buyer Pain Points Did you receive my invoice? When will I get paid? Can I get paid earlier? Supplier Pain Points
  9. 9. Solving The “What If” Game What if… You can address your suppliers’ needs for early payment? What if… You keep all the returns that would have normally gone to the bank? What if… Suppliers could check the status of their invoices online 24/7? Suppliers could incentivize early payments? What if… What if… There is a way for you to pay your suppliers less and have them thank you?
  10. 10. This Can Be Achieved with Dynamic Discounting 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
  11. 11. An Emerging Trend Introduction Growth Maturity Decline Innovators Early Adopters Majority Laggards Source: PAYSTREAM ADVISORS Dynamic Discounting IDC/OCR Paper Check P-Cards Outsourcing Front-end Imaging & WorkflowE-Procurement Electronic Invoicing B2B E-Payments
  12. 12. Payables as an Opportunity for Revenue 0 DAYS invoice 10-15 DAYS approval 60 DAYS due date OPPORTUNITY AVERAGE PAYMENT TERMS (DAYS) Anheuser-Busch Hertz Apple Industry Average 120 DAYS 60 DAYS 45 DAYS 56 DAYS
  13. 13. 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
  14. 14. Now With More Flexibility Than Ever Before Buyers can now pay their suppliers early while having the flexibility to choose the funding source 3rd Party Financial Institution Buyer-Funded
  15. 15. Flexible Interest Rates Set By You • Available cash • Supplier segmentation • Offer rates • Available payment dates • DPO strategy • Market interest rate • Supplier rating (Dun & Bradstreet) • Supplier performance (Scorecard, Preferred Supplier) • Opt-in based on supplier need at the time of approval to the • Offers are made to AR who are managing collections • Result often differs from initial PO negotiation Finance controls the offer Rates are flexible Supplier can opt-in
  16. 16. Why Suppliers Choose Early Payment Discounts Allow them to get paid sooner Payment dates are well under industry averages Discount rates can be less expensive than alternative forms of financing More convenient than funding alternatives Better balance sheet Helps to meet quarterly targets
  17. 17. Cost-Saving Efficiencies Dynamic Discounting Financial Gains eInvoicing Efficiency Gains
  18. 18. Unparalleled Visibility, Control & Compliance The Many Cost-Saving Benefits of eInvoicing Reduced Processing Costs Increased Invoice Approval Cycle Times Improved Cash Management Increased Visibility into Invoices and Payments Greater Accuracy and Efficiency
  19. 19. Key Buyer Benefits of an Automated P2P Platform 01Eliminate paper and data entry from the invoicing process to increase AP efficiency INCREASE eINVOICING 02Give suppliers 24/7 access to the status of their invoices and payments ELIMINATE INQUIRIES 03PO distribution, delivery, confirmation and ASN. PO flip into invoices CONTROL ASN & PO 04Interact and communicate with suppliers more efficiently. Control mass communication COLLABORATE 05Allow suppliers to update banking and address; request documents electronically VENDOR MAINTENANCE 06Add benchmarks, measure performance metrics and make actionable decisions ANALYTICS
  20. 20. Key Supplier Benefits of an Automated P2P Platform 02Suppliers have 24/7 access to the status of their invoices and payments TRANSPARENCY 06Suppliers can easily update banking and contact information – reducing error and speeding payments SELF SERVICESEARLY PAYMENT DISCOUNTS 05Suppliers can opt-in for early payment discount as an inexpensive, fast and easy way to obtain financing 04Suppliers can easily forecast financials and plan ahead for future needs IMPROVED FORECASTING IMPROVED PAYMENT TIMING 01Suppliers can easily manage their cash flow with payment certainty 03Billing and remittance information is available 24/7 LOWER AR COSTS
  21. 21. Turning Payables into a Revenue Generator Reduced Costs Financial Operational Costs Hard Savings Through Discount Program Reduce Supplier Inquiries / Redirect Resources Eliminate Paper within AP Organically Grow eInvoicing Reduce Invoice Approval Cycle Time Reducing Manual Entry Errors Improved Supplier Services Do Something FOR your Suppliers Instead of TO your Suppliers Self-Services Allow Less Administrative Resources Improved Controls and Supplier Satisfaction
  22. 22. Transforming Your AP Department Imagine a world where… Supplier inquiry calls become a thing of the past Automating and maximizing supplier discounts is finally achievable Buyers have a lean invoicing, payables & discounting process trimming millions off the bottom line
  23. 23. Questions?

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