Cost Management: Accounts Payable, Discounting and Self-Service Supplier Haircuts

In terms of cost management strategies, we all too often jump to strategic sourcing and negotiation efforts without addressing the compliance side of procurement. It's a misnomer that P2P (eProcurement and e-invoicing) is just about driving buying compliance to preferred suppliers. It's also about managing demand more effectively, reducing unnecessary purchases and finding new ways to take advantage of accounts payable (AP) activities.

This last point is all too often lost on supply management teams. But enabling suppliers to take advantage of discounts that can result in significant cost reductions for our buying activities should be front and center in cost management strategies for 2013. Over on Purchasing Insight, my friend and colleague Pete Loughlin does a great job of articulating the value that a simple cost management approach to accounts payable can bring, highlighting the Taulia discounting solution (that is tied at the hip with SAP SCC). As Pete suggests:

If you want your organization to enjoy the benefits of 10-20% return on cash by collaborating with suppliers and you want to know how it's done, do yourself a favor. Skip the research. Miss out the sales pitch. Go and see a demo of Taulia ... buyers can claim early payment on invoices using a simple calendar interface ... payment terms are set in the buyers SAP system. You need to see this to understand it. Suppliers set the payment date in their customers SAP system. They don't just request early settlement and hope for the best – they actually reach into their customers SAP system and change the payment date."

And give themselves the exact haircut requested – without procurement or AP needing to even take out the cost management scissors themselves!

Source: brokeassstuart.

- Jason Busch

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