Found money! Few things bring people as much joy as discovering loose change or paper bills in unexpected places — under a sofa cushion, in the pocket of an old pair of jeans, or tucked in the back of a sock drawer.
Chances are, your organization is sitting on its own windfall.
Only in this case, the found money comes in the form of lucrative early payment discounts.
An eye-popping 80 percent of suppliers offer their customers discounts on the amount due on invoices in exchange for early payment, per the Institute of Finance and Management (IOFM).
Why Companies Don’t Maximize Supplier Discounts
Maximizing these discounts can offset an accounts payable department’s overhead.
But 46 percent of organizations capture only 1 percent to 5 percent of all early payment discounts available from suppliers and 20 percent of organizations don’t capture any early payment discounts. To be sure, some organizations pass on supplier discounts to preserve their working capital.
But there are three reasons that most organizations don’t capture early payment discounts:
- They don’t know that their suppliers offer them.
- They don’t process invoices fast enough to capture them.
- They don’t have the resources to capture them.
How automation eliminates early payment discount barriers
Payment solutions such as those from ACOM eliminate all three of these challenges.
- More discount opportunities: ACOM takes on the burden of contacting and enrolling your suppliers in electronic payments programs, including those that include discounts for early payment. Specialists contact each of your suppliers to clearly explain the payment options available to them, and to get their agreement on how they would like to be paid.
- Fewer missed discounts: When it takes 30 days to approve an invoice for payment, there’s not as much time to discount it, which means there’s not as much value for the buyer or the supplier. Approving invoices for payment with ACOM’s technology and that of its partners takes a fraction of the time of manual approval processes. This type of automation is a big reason that top-performing accounts payable organizations capture seven times as many early payment discounts as their peers, according to The Hackett Group’s benchmarking data.
- No-hassles: ACOM handles all the paperwork, supplier registration, and administrative tasks associated with migrating to electronic payments programs that offer discounts for early payment. Once suppliers are enrolled in electronic payments, the capture of early payment discounts is completely automated: you don’t have to call or e-mail suppliers with early payment discount offers, payments are made automatically, and reconciliation is a snap.
Speak To An Expert
Wondering how much money your organization might find from early payment discounts? ACOM Solutions experts can provide a no-obligation analysis of your payments to identify opportunities.