Please download our frequently asked questions PDF, which covers much more. 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.
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:
- 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.
- 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.
Why should I choose SAP Ariba Discount Management?
SAP Ariba Discount Management is the only discounting solution available that offers all the following advantages:
- Seamless integration with your other cloud-based procurement solutions so you can efficiently manage all procure-to-pay processes within a single, end-to-end system
- Fast, easy integration to any ERP system through Ariba Network to support back-end connectivity
- Coverage across 100% of your supplier invoices, regardless of whether suppliers are transacting electronically on Ariba Network or not
- Automated dynamic discounting that gives you a quick, simple way to negotiate and manage sliding-scale supplier discounts based on invoice payment dates
- Payment terms optimization through access to benchmark and historical data about payment term trends for supplier and category spend
- Program management and execution support including design, training, enablement, and program growth to help you achieve savings and optimize cash flow
How does SAP Ariba Discount Management interact with other SAP Ariba solutions?
SAP Ariba Discount Management resides on Ariba Network, and is a set of configurable and detailed logic that lets you and your suppliers collaborate dynamically on early-payment options for approved invoices. The solution capitalizes on the speed of the overall SAP Ariba solution suite, enhancing discounting benefits through fast invoice reconciliation and instant communication with suppliers over Ariba Network.
Are there other capabilities of SAP Ariba Discount Management that I should know about?
Because SAP Ariba Discount Management resides on Ariba Network, it is fully configurable directly in the user interface (UI). As a buyer you can easily add or delete payment terms, configure rules, suspend early-payment offers, run detailed reporting, or add suppliers to terms quickly and in real time. The solution supports a variety of payment term options for you to configure early-payment programs based upon your goals.
Suppliers can access payment information and early payment offers for all their participating customers in their Ariba Network account. This portal gives suppliers details about their scheduled payments, rich remittance data, reporting capabilities, and access to the SAP Ariba cash optimizer, which allows them to accept early payment on invoices based upon specific cash flow needs.
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.
What working capital management services do you provide?
The working capital management services team for SAP Ariba solutions is one of the most knowledgeable in the industry, with decades of experience designing, running, and maintaining successful payment term management and dynamic discounting programs. Understanding that most companies do not have the time, expertise, or resources to actively manage a dynamic discounting or payment terms initiative, the services team brings its expertise to help define a clear strategy. The team employs structured methodology to actively drive supplier onboarding and discount participation, delivering rapid ROI in the form of net-new discount savings.
Some advantages of the working capital management services team and its methodology are:
- Industry-leading experience and expertise: The working capital management services team has decades of combined experience in dynamic discounting and payment terms management/DPO improvement. Several team members helped to develop the market’s first dynamic discounting solutions and have since led the march forward to what is now recognized as a best practice.
- Deep working capital and dynamic discount analysis and strategy: At the beginning of an engagement, the team brings proprietary data and methodology to the analysis of supplier spend and payment terms. Knowing that certain suppliers and supplier groups are more likely to embrace discount programs than others, our experts help organize and categorize suppliers into the right discount offers based on propensity to offer discounts. The output of this analysis is a strategic wave plan to optimize payment terms and onboard suppliers for program goals of terms extension and/or dynamic discounting.
- ROI realization: As part of our services to you, we will actively reach out to your suppliers to recruit and onboard them for dynamic discounting and/or new payment terms. We have a team of people whose sole job is reaching out to suppliers’ finance, accounts receivable, and treasury organizations to educate them about early payment opportunities and enable them to take advantage of offers. This results in rapid realization of your business case ROI, often to the degree that it funds an entire initiative in a matter of months – and frequently funds other initiatives as well.
- Life-of-contract involvement: The working capital management services team for SAP Ariba solutions stays with you for the life of your program. This includes ongoing supplier outreach, quarterly strategy reviews and updates, and monthly program updates and reporting.