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Improve AP Performance BY MAKING KPIs COUNT 4 of 5

Discount CapturePercentage of Negotiated Discounts Captured

A number of organizations negotiate discounts with suppliers for early payment, but often, many of them are unable to capture all available discounts. Tracking the percentage of discounts actually captured helps an organization increase discount capture, directly impacting bottom-line results. Understanding why discounts are lost and prioritizing the review and approval of invoices with discounts is critical to managing a successful discounting program. One of the primary reasons for missed discounts, typically, is a lengthy invoice approval cycle, which significantly exceeds the five-day window that organizations usually have to capture negotiated early payment discounts.

A large U.S.-based company was unable to negotiate discounts with suppliers as the invoice approval process was long and payments were inconsistent, owing to paper invoices and manual processes. After implementing a payables automation solution, the company has successfully accelerated the invoice approval process, enabling it to negotiate discounts with more than 90% of its identified critical supply chain vendors and to successfully capture the discounts available.

 

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This article was orginally posted on Paytech.com in January 2015

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