Collaborate with suppliers on early-payment discounts using discount management with dynamic discounting
With SAP Ariba Discount Management and working capital management services, not only can you boost your suppliers’ liquidity, but you can also earn far greater returns than short-term cash investments provide.
This can be especially helpful for stabilizing your supply chain during rocky economic periods. Not only can you help your strategic suppliers maintain cash flow, but you can also better control your costs while optimizing working capital.
Collaborating with the suppliers you choose, you'll use on-demand tools for automating the early-payment discounting process, from initial offer through final capture. It all transpires over Ariba Network, the world’s largest business network. If a supplier isn’t already on it, it’s easy to enable them.
You’ll then be fully equipped to:
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Manage payables and cash with greater precision, control, and visibility
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Expand discount capture across targeted suppliers, spend, and invoices
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Enforce pre-negotiated contract and discount terms
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Employ tools for capturing additional sliding scale discounts
Optimizing Cash Flow with SAP Ariba Discount Management
Watch this snapshot video for look into a chemicals company’s experience negotiating early-payment discounts with 600 suppliers to achieve $2.8M in projected savings with SAP Ariba Discount Management.
Product Features


Reduced supply risk
Getting payments to suppliers when they are short on cash can help mitigate the risk of supply chain disruption while reducing your supply costs.
Under your control
You set business rules to initiate early payments only when you’re assured discounting will deliver your required internal rate of return.
Set it and forget it
With one option, you set your preferred discounting parameters once. Upon invoice approval, automation takes over to capture pre-determined discounts.
Discounting flexibility
Set always-on prorated discount terms that capture discounts on a sliding scale. Or use dynamic discounting, and capture discounts based on ad-hoc supplier cash flow needs.
Time and cost savings
Eliminate slow and costly processes and accelerate the cash conversion cycle. Minimize supplier inquiry calls with automated notifications of discount offers and approvals.
Boost supplier satisfaction
Web-based tools equip suppliers to collaborate with you on payment timing, while an easy-to-understand dashboard keeps them apprised of payment status.
Offer strategic on-boarding
Our dedicated services team can help you analyze, categorize, and organize your suppliers for participation based on their predisposition to discounting.
Adoption assistance
SAP Ariba’s solution experts can help drive adoption within your organization and among your supplier base.
Frequently Asked Questions
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What is dynamic discounting?
Dynamic discounting is a process that allows you and your suppliers to negotiate a continuous, sliding-scale discount that you receive for early payment of invoices. The sooner you pay, the higher the discount rate. For example, if you have a 30-day net term, you and your supplier might agree that you’ll receive a 2% discount if you pay on day 10 and a 1% discount if you pay on day 20, sliding down to a 0% discount if you pay at the full term of 30 days.
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How does SAP Ariba Discount Management work?
SAP Ariba Discount Management combines dynamic discounting technology with consulting expertise in payment terms strategy, enabling you to increase net income and improve cash flow while helping your suppliers manage their cash better and gain visibility into their cash position. The solution delivers these benefits through four key functionalities: dynamic discounting, payment terms management, a self-service supplier portal, and working capital management services.
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What overall benefits does SAP Ariba Discount Management provide?
The solution offers a wide range of benefits to you and your suppliers, including the following:
Buyer benefits
- Strengthen your financial supply chain: Mitigate risk and support business continuity in your supply chain by strengthening suppliers’ ability to manage liquidity needs.
- Enhance your cash flow and working capital position: You can expect approximately $40 million of increased free cash flow for every $1 billion of spend extended 15 days.
- Capture early payment discounts at any point to invoice maturity date: Automate the early payment terms process to reduce missed discounts and capture additional savings from supplier discounts on all spend per supplier or an invoice-by-invoice basis.
- Increase cash returns: SAP Ariba-led early payment programs enjoy, on average, APRs between 24% and 36%, significantly outperforming most internal investment hurdle rates or returns on short-term cash.
- Give suppliers greater transparency and access to capital: Through Ariba Network, suppliers gain full visibility into when they’ll get paid, reducing the volume of inquiries to your accounts payable department.
- Fund business objectives through early payment program: Cash flow and/or income generated can be put to work to build new plants or stores, increase R&D spending, enter new markets, conduct mergers and acquisitions, pay down debt, or issue dividends.
Supplier benefits
- Accelerate cash flow: Suppliers can accelerate payments with buyers on Ariba Network based upon their cash flow needs.
- Reduce days sales outstanding (DSO): By expediting conversion of receivables to cash, suppliers can reduce DSO and free up working capital for other needs.
- Control payment timing: Suppliers can request automatic early payment on all invoices upon full approval to pay, or on an individual invoice- by-invoice basis as cash flow needs dictate.
- Gain payment visibility: Suppliers can use Ariba Network to see the details of their scheduled payments along with line-item rich remittance information, closing the loop between invoice and payment.
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Does a supplier need to accept an early payment on all invoices?
No, suppliers can accept early payment on an invoice-by-invoice basis. This option is called the buyer-initiated early-payment option since you, the buyer, are offering a certain rate at which the invoice discount is calculated.
Get more answers
If you have more questions, download our frequently asked questions PDF, which covers more topics. You'll find answers to questions about ERP integration, supplier collaboration, SAP Ariba services, and how SAP Ariba Discount Management can help your business during this time of economic uncertainty.
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