E-Invoicing: The Key to Working Capital Management

Tuesday, March 04, 2014

The operational benefits of e-invoicing are compelling.

But e-invoicing can deliver an even bigger payoff – in terms of millions of dollars a year in savings and stronger trading partner relationships – through early pay discounts. Main Street Advisors estimates that early pay discounts represent a $9 trillion investment opportunity worldwide.

E-invoicing enables early pay discounts through faster approval times, automated discount offers, and the tracking of spend. Faster approvals through e-invoicing result in more and greater discounts; the higher the level of invoice automation, the larger the opportunity for early pay discounts.

There are three primary methods of capturing early pay discounts:

  1. early pay programs such as sliding slope discounts and ad hoc cash offers (“Pay Me Now”);
  2. p-cards (buyer initiated payments); and
  3. supply chain financing, which uses bank financing to extend Days Payables Outstanding (DPO).

Direct Insite’s cloud-based e-invoicing platform is a key enabler of working capital management.

Our PAYBOX® platform provides the range of capabilities necessary for early pay discounts:

  • Supplier management
  • Order management
  • Invoice management
  • Payment management
  • Discount management

Direct Insite’s PAYBOX® Dynamic Discounting module enables buyers and suppliers to dynamically change the payment terms to accelerate payment based on a sliding discount scale, and initiate electronic payments using Direct Insite’s fully integrated Payments Service.

The module leverages Direct Insite’s supplier portal to provide suppliers with the flexibility to discount their approved receivables at any point up to the invoice due date. Similarly, buyers can use the portal to dynamically offer suppliers earlier payment in exchange for discounts. Direct Insite’s “Pay Me Now” functionality enables suppliers to immediately initiate payment for accepted discount offers.

Buyers and suppliers simply log into the PAYBOX® Web portal to view approved invoices eligible for discounting. The module clearly displays for suppliers the fees associated with each discount level. Once the buyer or supplier specifies which invoices they want to discount, PAYBOX® automatically notifies the appropriate pre-set contact at the trading partner organization. The module also can be configured to automatically escalate notifications if no action is taken.

With this functionality, Direct Insite customers can build on the operational benefits provided by e-invoicing to achieve potentially millions of dollars in discounts, and stronger partner relationships.

Want to learn more? E-mail me at jim.mcshea@directinsite.com.