Optimize Cash Flow for You and Your Suppliers

Optimizing working capital is something you want to do in good times and bad. But during recessionary periods, making the most of your day-to-day operating cash is even more critical. To do this effectively, you need a way to gain greater visibility into and control over cash flow, extend days payable outstanding (DPO), and maximize discount captures - all while maintaining solid relationships with suppliers.

Achieving these goals is nearly impossible when you rely on manual, paper-based processes. In addition to tying up working capital longer than necessary, they simply can't give you the real-time visibility and control you need to make timely, informed decisions. For example, according to Aberdeen research, most companies only capture about 50% of available discount opportunities because of missed deadlines and lack of insight into how early payments will impact their working capital situation.

Ariba's proven solutions support a holistic working capital strategy that addresses these challenges. Ariba Working Capital Management solutions work seamlessly with Ariba Invoice and Payment Management solutions to optimize working capital, maximize your return on cash, and minimize risk in your supply chain. Using powerful automation, workflow management, real-time reporting, and cash flow management tools, frees up your payables staff to work on more strategically aligned projects.

Solution Highlights

Ariba Working Capital Management solutions - which include Ariba Discount Pro and Trade Financing solutions - are simple to use and available on demand. They enable you to:

• Proactively manage cash flows: Strategically control disbursements and gain visibility into the order-to-pay process.
• Establish and enforce best-practice term policies: Rationalize payment terms with suppliers for greater visibility and control over payments, and automate enforcement of policies.
• Maximize discount opportunities: Capture up to 100% of pre-negotiated discount terms by setting up advanced discount terms (such as prorated discounts that allow you to capture discounts after due dates have passed) and using dynamic discounting so your suppliers can offer incentives for accelerated payment.
• Maintain or extend DPO: Extend your days payable outstanding (DPO) - for example, through third-party financing of purchases - to earn higher, risk-free returns on your payables. You can lower your cost of capital for greater competitive advantage.
• Remove risk in your supply chain: Provide suppliers with better visibility and control over their cash flow, as well as easy access to additional pools of liquidity for lower supply chain risk.
• Lower the hurdle for suppliers to participate in e-Invoicing: Ariba's working capital management solutions are highly attractive to your supplier - which encourages their participation and grows your e-Invoicing initiative. Your suppliers only need a web browser to participate and gain visibility and control over their cash flow.

Learn about the features and benefits of Ariba's Working Capital Management solution.
Request more information about Ariba Working Capital Management, or call 1-866-367-6188.

Enable a Holistic Working Capital Strategy

Did you know that…

• A leading analyst firm expects that by the end of 2009, at least 30% of the Fortune Global 2000 will adopt dynamic discounting as a standard practice?
• For every $1 billion in payables, extending terms by just 15 days can free up $41 million in bottom-line savings.

These statistics illustrate why businesses are moving rapidly toward a holistic working capital strategy as a source of competitive advantage. Ariba Working Capital Management solutions take a business network perspective, helping you collaborate with suppliers to achieve win-win solutions. By leveraging the end-to-end automation enabled by Ariba Financial Solutions and adopting leading practices, companies deploying Ariba Working Capital Management solutions are enabling greater visibility and control over their cash flows, maximizing early pay discount capture, while maintaining or extending days payable outstanding (DPO).

Highlighted Features

To optimize working capital management, Ariba provides you with flexible solutions that business users can customize to meet unique needs. Together, they enable:

• Supplier group management: Categorize suppliers based on their propensity for discounts and proactively manage spend to maximize discount opportunities and achieve your desired rate of return. By grouping suppliers into categories of discounts in an intelligent way, you can make fast, informed decisions about who to spend with, set formulas to ensure you achieve your desired internal rate of return, and reduce your overall working capital needs.
• "Set it and forget it" discounting: Now, discount offers sit on Ariba Network, and as soon as an invoice is approved, automated collaboration enables you to take advantage of discounts. You simply set parameters once and capture the savings.
• A working capital dashboard: Provide suppliers with visibility into their cash acceleration options so they can propose on-the-fly discounts to accelerate payment - for example, to increase short-term sales, move out-of-date stock, and secure working capital.
• Third-party supplier financing options: Minimize supplier risk by enabling suppliers to sell their accounts receivable (their invoices) to a third party at a discount in exchange for immediate cash flow. Suppliers benefit from a lower average cost of funds (compared to venture capital funding), and you build stronger supplier relationships.
• Enhanced supplier collaboration: Enable suppliers to view your invoice and payment status so they can plan accordingly, better forecast their cash flows, and optimize business planning.
• Control over how much cash gets discounted: Leverage fine-grained control over how much of your cash is available for dynamic discounting and with which suppliers.
• Customized discounting options: Ariba supports a wide variety of discount terms that give you great flexibility to meet business needs:
  • Permanent, pre-negotiated payment discounts, which are applied automatically until contract terms end.
  • Standing, prorated discount terms, which are applied when both parties agree to activate them. Now you can capture discounts even after the discount due date has passed.
  • Dynamic discounting, which you can take advantage of whenever you want to. Suppliers can accelerate payments by offering on-the-fly discounts designed to increase their working capital. You can even create a "dynamic discount group" and set up the software to automatically approve discounts that meet terms defined by your cost-benefit analysis.

Learn about the features and benefits of Ariba's Working Capital Management solution.
Request more information about Ariba Working Capital Management, or call 1-866-367-6188.

Realizing the Benefits of Working Capital Management

Ariba Working Capital Management solutions don't just improve cash flow - they provide you with powerful tools to control business outcomes for you and your suppliers. After you remove latency in your invoice approval and payment process via automated solutions, you open up a whole new world of opportunity to collaborate in mutually beneficial ways. Ariba's working capital management solutions exploit the window of time between when an invoice is approved and paid to, for example, give suppliers the opportunity to offer on-the-fly incentives for early payment so you can benefit from a higher internal rate of return and greater supplier stability.

And finally, you can increase supplier willingness to participate because automation ensures that when you agree to an early discount, they will get paid as promised. Greater supplier willingness to participate translates into new and greater discount opportunities for you. At the same time, Ariba Working Capital Management solutions enable you and your suppliers to bypass the need for bank liquidity - a real benefit during recessionary periods.

Highlighted Benefits

Using Ariba's working capital management solutions, you can:

• Reduce net working capital requirements: Take full advantage of pre-negotiated and dynamic discounts with suppliers so you lower your net working capital requirements. For example, you can potentially use your cash to earn a 10-20% return through discounts (a higher return than banks can offer) while giving your suppliers an alternative source of liquidity that's interest free.
• Maximize return on cash: Get a higher return on cash by making informed, timely decisions regarding - for example - whether or not to take advantage of options such as early payment discounts.
• Reduce supply chain risk: Collaborate with suppliers in ways that benefit you, while simultaneously ensuring that your suppliers have adequate cash flow to fund continued operations. Now finance and procurement departments can come together to bring stability to suppliers and to your business.
• Lower supplier management costs: By giving suppliers visibility into invoice approvals and payments, you can minimize the time and effort needed to manage your suppliers - for example, by eliminating the need to field phone calls regarding when to expect payments.
• Boost efficiency: You can automate discount management using a "set it and forget it" approach that ensures you maximize discount captures when it makes sense for your business. The functionality also eliminates paperwork, automates quality control, and speeds processes.
• Penetrate farther into your supply base: Increase supplier confidence that you will comply with discounted payment terms and give suppliers an incentive to participate.

Request more information about Ariba Working Capital Management, or call 1-866-367-6188.

Resource Library: Invoice and Payment

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