Taulia: Putting Discounting First to Slip Under the e-Invoicing and SCF Radar (Part 4)

Please click here for Part 1, Part 2, and Part 3 of this post.

AP organizations can configure all of the underlying elements of the Taulia solution either within the SAP environment itself or within the Taulia portal (the Taulia portal allows defining the portal fields and functionality as well as front-end validation that must be met for data to be accepted). Configuration-wise, the application does not require a technical analyst or developer to drive a rollout or changes (aside from initial integration into customized or multiple back-end environments). For example, a business analyst or user can manage the entire enrollment and on-boarding controls and processes for suppliers under a common settings area. This may include requesting specific on-boarding details, mapping terms specific to a P&L, location, etc. to the Taulia-offered discount terms, managing auto-offer settings, etc.

For SAP integration, all of the specific integrated workflow and updating controls are managed in the same area (e.g., defining reference interest rates, defining payment block reasons for payment release). In addition, all of the details surround early payment settings including defining different supplier and rate groups, controlling alerting, etc. is controlled in the same SAP environment. Assigning different rates by supplier, groupings of suppliers, geographies or other vendor lots is straightforward and easy to edit. For global users, tax code mapping (e.g., in cases where managing VAT information is necessary) occurs in the same environment as well.

One of the more nuanced aspects of Taulia is that the entire discounting process serves as the impetus to improve all the KPIs and metrics surrounding the invoice approval cycle, which incidentally, does not required an existing e-invoicing toolset -- Taulia can enable e-invoicing on its own as well as leverage existing e-invoices from another provider, invoice data manually entered into SAP, evaluated receipts settlement information (or other more exotic approaches), check requests and EDI information, as required. Moreover, Taulia itself provides the planning cockpit (without requiring an external BI toolset) to consider and run different scenarios to optimize and tailor a specific discounting program on an ongoing basis.

For example, in the Taulia Analyzer, users can instruct the system to optimize for a specific outcome based on a range of variables (accelerating processing time, setting specific discount terms based on cash available, etc.) and then look at the results of the analysis. The idea is that nothing is left to chance. Taulia includes its Analyzer capability as part of its core offering (its bundled together), allowing users to constantly create and monitor the return on investment (ROI) of the program based on the actual underlying SAP systems data itself.

Taulia is working with numerous SAP customers today with multiple back-end environments and instances. SAP users going back to the R3 4.6C release (now over a decade old) can integrate with Taulia out of the box. From a commercial perspective, Taulia is not currently on the SAP price sheet, a move that Spend Matters believe would benefit both SAP and Taulia by helping SAP better compete against discounting specialists it is not currently partnered with (for e-invoicing, it already has a range of relationships include Open Text, Hubwoo and IBX/Capgemini).

In buyer vs. supplier-funded models, Taulia is adamant about not charging any fees to suppliers: No fees for access, visibility and self-service capabilities (e.g., creating invoices). The supplier only agrees to the discount if he decides to accelerate payment and there is no network or transaction fee. However, Taulia competitors like Ariba and partners like OB10 do provide additional invoicing and supplier-focused integration services outside of what Taulia provides today, making apples-to-apples comparisons of supplier benefits and costs difficult. Still, suppliers do not have to budget anything upfront, which is different than most other providers in related e-invoicing, discounting and supply chain finance ecosystems.

What types of returns can Taulia customers expect? Taulia told Spend Matters that they consider an organization "best practice" when it achieves $5-10M in early payment discounts per $1B in spend. From an adoption standpoint buying organizations switching on Dynamic Discounting can reap at least $1MM in savings per each $1B in annual spending. In terms of drafting best practices, Taulia recommends that new customers develop terms -- with both AP and procurement collaborating -- taking into account a supplier's likely cost of capital to optimize adoption. In terms of actual adoption, Taulia has seen customers achieving as much as 90% of supplier adoption to as low as 30% within 6 months.

Stay tuned as we conclude our Taulia analysis looking at a customer case experience and providing our final word on this discounting upstart.

- Jason Busch

Voices (4)

  1. Bertram Meyer:

    Hi Lurker and Finance Professional,
    blue chip customers are buying and continuing to buy Taulia for two key reasons:
    First, a solution that is seamless from the SAP payment run to the supplier interface and installed in days. Second, a solution that achieves revolutionary supplier adoption because it provides the best supplier value and is completely free for suppliers. We believe in the continued attractiveness of these unique selling points.
    Also, allow me to question the role of Ariba in the Dynamic Discounting space: While Ariba is a bigger company and has procurement functionality that Taulia does not offer, we have good reasons to believe that Taulia is a larger and more successful player when it comes to Dynamic Discounting. Ariba itself published numbers in a Forbes article on their early payment discount performance which Taulia easily exceeds. This is a result of Taulia’s clear focus on the dynamic discounting value proposition.
    On the supplier adoption: Yes, it’s hard to believe but true: Taulia achieves supplier adoptions of above 85% within a year and above 30% within 3 months. We invite you to listen to one of our customers speak or to watch the recorded PG&E webinar on our web site.
    Finally, the time is better than ever for dynamic discounting, as large corporations are cash rich and do not earn meaningful returns on their short term investment. At the same time the factoring market worldwide is larger than and now exceeding $2.3 Trillion. Taulia is about to close the most successful quarter of its company history, with Q2 revenues higher than 2011 annual revenues…so we don’t have any indication for a change of environment.

  2. Finance Professional:

    Having watched the P2P and Dynamic Discount market since 2003, I am skeptical that they have acheived 30-90% supplier adoption. Just the logisitcs of contacting, educating and on-boarding that many suppliers is a daunting task, and one that no P2P provider has ever accomplished for ePO or eInvoice, let alone the added complexity of discounting. Most F2000 companies have upwards of 10,000 suppliers. So contact 90% of these would require a sizable staff and potential renegotiation of contracts.

    Also, in the post-crisis era of working capital management focus, Dynamic Discounting would seem to be losing favor due to the negative balance sheet impact (cash, DPOs) and the high hurdle rates which come back as increased COGS. At least in Europe, banks are seeing a trend where companies are unwinding their early pay discount programs (whether Dynamic Discounting or simple 1% 10 Net 40 type terms) and using lower cost, off balance sheet bank financing.

  3. Jason Busch:


    Few quick things …

    1) I think the discounting market is still up for grabs — too nascent to call anyone a winner yet
    2) I wrote this post series before the big news
    3) Ariba certainly could change the SAP dynamics/partnership, however don’t underestimate the Taulia plumbing and native SAP integration, Ariba front-end or not

    Still, point noted … this heats things up.

  4. lurker:

    SAP won’t need to put Taulia on their pricesheet now that the largest and most successful Dynamic Discount provider in the market is going to BE SAP.

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