Taulia: Putting Discounting First to Slip Under the e-Invoicing and SCF Radar (Part 2)

Please click here for the first post in this series.

One of the hallmarks of Taulia's approach is the flexibility it provides to customers with often non-standard rates/terms across the supply base. Using the Taulia discounting solution directly integrated into an SAP environment, AP and treasury organizations have the ability to either set a standard discounting payment policy (e.g., maximize the taking of early payment discounts by the entire supply base) or target such programs based on available cash or other constraints. One can look at the margin difference "between the rate offered" and the "cost of capital," as Taulia suggests for a means to maximize an adoption strategy based on the outcomes desired (given any internal constraints). But most important of all, especially compared with earlier discounting and payment providers like Xign (now part of JP Morgan Chase), Taulia's discounting model is focused on targeting all invoices and encouraging companies to get to a high-level of penetration that goes beyond first generation approaches.

Taulia's most basic workflow configuration seems simple on the surface. A buying organization sets the interest rate at which it is willing to offer earlier payment on approved invoices for all suppliers or a specific group of suppliers. All in-scope suppliers receive a notification for new invoices eligible for earlier payment and can select the payment date and accept the discount in the portal. Following this acceptance, the solution updates the payment information and payment instructions within SAP automatically.

Yet there is much more to the application than this basic workflow. Upon logging in to the Taulia application, the supplier is greeted with a screen that provides quick navigation to access purchase orders, plan cash through a "cash planner" tool and view or create invoices, among other choices. Recent POs, messages and existing opportunities available for early payment are provided front and center (with details including invoice dates, due dates, amounts, status and available actions -- e.g., "pay me early").

If a supplier clicks the "pay me early" button, a screen pops up with a calendar to select the payment date. Upon filling in these details, the supplier is presented with the discount percent, discount amount and payment amount (which changes dynamically based on the date chosen). Based on SAP data, Taulia can calculate these amounts because it knows the buyer-defined interest rate and the acceleration against the standard payment dates.

When the supplier then clicks the accept button, the information is relayed to SAP automatically. The Taulia system can be configured to then offer the option to suppliers to enroll in an "auto accept" program in the future. At this stage, the supplier is presented with a graph showing the impact of a discount in percentage terms (for an auto-enroll program, or any discount for that matter) based on the number of days (e.g., for a standard Net 45 or Net 60) of the standard term. For example, requesting payment on the same day as an invoice is issued (or the date on the invoice itself) might result in a 1.5% haircut (all configurable, mind you), whereas based on the same APR, payment on the 43rd day when Net 45 terms are standard would result in a .067% discount.

Beyond the auto-enroll option for future invoices and the ability to select the preferred payment date -- with a discount taken out accordingly -- suppliers can also take advantage of a basic cash planning tool, which allows them to select on what day they need a certain amount of cash by and the amount required. Users also have the ability to include or exclude invoices that are already due by that date (given that we all know invoices are often paid past the agreed terms, selecting the inclusion option can provide a very low cost means of security/insurance, even if the option to take a discount is only 1-2 days ahead of the maturity of the obligation (e.g., 59th day of a Net 60 term).

Based on the dates selected and amount of cash required, suppliers are then presented with different options that are available for early payment as well as the discount amount, expressed in both gross and discounted terms. A summary snapshot provides the aggregate impact of the different invoices selected including the total amount selected for early payment, the amount theoretically available and the impact of the discount on the actual payment.

Unfortunately, the cash planner option is only available on a per-buyer basis right now. In other words, suppliers can't use the cash planning option across customers who may have deployed Taulia, in effect using the application and service to view competing options that could create the most advantageous payment and discount schedule. We suspect, however, that such an option is likely in the works for the future, and technology-wise the amount of new development would be minimal (the question would be getting Taulia's AP, treasury and procurement customers to agree to let suppliers participate in a many-to-many marketplace environment for discounting rates, creating competition).

Stay tuned as our analysis of Taulia continues.

- Jason Busch

First Voice

  1. lurker:

    Enjoying this series but do procurement people really care about the nuances of SAP payables integration to enable working capital control and discounting to work? Does AP care about procurement for that matter? That is the problem you should be solving here in addition to tools. They should. Keep it up.

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