Dynamic Discounting

So you think DPO is important? Well it is of course but manging it effectively comes at a price and it may be higher than you think. DPO (days payables outstanding) is an imoportant KPI for AP people but in many cases there is a hidden cost in keeping DPO figures high. It's the often significant opportunity cost of not taking discounts.

How can a banjo frailing ballad singer in Appalachia operate a more modern business model than a government department? Imagine that I am a finance director in the UK with personal tastes which run to “roots” music. Even for relatively obscure artists in any genre and any country, I will probably be able to find a website either for them or a distributor and buy their music directly as a cd or as a download. I will pay with my credit or debit card and get my cd a week later or my download almost immediately. The artist will get paid relatively quickly and pay a merchants fee which they will have factored into their original pricing. What I will not do is raise a requisition for the cd, have it approved and then issued to the artist, create and issue a goods received note when the item is delivered and approved, match the ensuing (paper) invoice against the receipt and the order and then promise the artist that I’ll instruct my bank to pay them 30 days thereafter. Yet, when I go into work the next morning, guess which process I will insist that my organisation uses?

Don't tell me your solution is ERP agnostic. I’m a believer in my ERP system and I want to deal with fellow believers. I don’t want to hear that you sit on the fence. It’s a familiar dilemma for vendors. They’d like to please everyone – be all things to all men - or women for that matter. Sales people are always asking product development teams for more functionality, new connectors, compatibility with new standards and so on in order to be compatible with all possible scenarios. So being ERP agnostic – from the vendors point of view – seems like a good thing. Right?

The more I look at the proposed acquisition of Ariba by SAP, the less sense it makes. SAP didn't need the functionality. They didn't need the brand. The Ariba shareholders will clearly be pleased to see this deal go through but what, I wonder, would an SAP sales guy be thinking and what would Ariba's competitors be making of it all?

Tradeshift, and Taulia have announced a partnership.  Tradeshift’s enterprise customers can now integrate to SAP® with Taulia’s advanced connector. The press release yesterday announced that Taulia will launch its Dynamic Discounting application on the Tradeshift network for businesses of all sizes, adding value for both buyers and suppliers and easing the invoicing process for all. We spotted the potential of both Taulia and Tradeshift in their early days and we've followed their progress with great interest. Indeed, both have subsequently become sponsors of Purchasing Insight and it's exciting therefore to see them capitalize on the synergy that exists between them.

I’ve heard more reasons why not to use supply chain finance than I’ve heard good reasons to use it. The problem appears to be that those advocating it are the sales people. They would say that wouldn’t they? And those arguing against it are the accountants and treasury managers – and they’re the “experts”. What we don’t get to hear is a real example of what it can deliver. Until now.