Early Pay Discounts in the Real World
Our customers have many enterprise systems and to get the greatest value out of their investments, we often find ourselves integrating multiple systems. As an example, one of our customers wanted to implement OpenText’s Vendor Invoice Management but do so in the context of their enterprise which included SAP, Taulia and Vertex. And, do it in the cloud. First a quick summary of the major enterprise applications that we integrated:
- SAP, of course, automates finance among many other business operations. As the enterprise resource planning platform, SAP handles nearly all aspects of an enterprise.
- OpenText provides software to manage enterprise information. The OpenText Vendor Invoice Management (VIM) solution tightly integrates SAP and automates, as its name implies, vendor invoices removing much of the manual work involved in processing and paying invoices.
Figure 1 – OpenText Vendor Invoice Management (https://www.opentext.com/info/extended-ecm/sap-vendor-invoice-management)
- Taulia’s software improves working capital management, electronic invoicing, supply chain finance, and dynamic early payment discount services. Essentially their software optimizes the financial side of the supply chain.
- Vertex software is a tax compliance solution which performs complicated tax calculations for each jurisdiction. While SAP provides a tax engine, many companies invest in Vertex as it substantially extends capabilities beyond those offered by SAP.
Electronic Invoice Processing
Also of interest, this customer was processing nearly all of their invoices electronically, so paper invoice automation features like optical character recognition (OCR) and form recognition were not high priorities. For those interested in document intake automation, we have extensive experience implementing optical character recognition and automation products offered by OpenText including:
- OpenText Capture Center (OCC),
- OpenText Invoice Capture Center (ICC) now referred to as Information Extraction Service (IES), a part of OpenText Intelligent Capture for SAP, and
- OpenText Core Capture, their latest cloud offering.
Given that this customer was already processing invoices electronically, you might wonder why they would need further automation? Simple, really. While the existing solution enabled vendors to submit their invoices electronically (using the Taulia Vendor Portal), the existing solution made it difficult for line of business managers to perform invoice approval. Also, from an invoice processing management perspective, invoice visibility was severely limited making it difficult for vendors and the company alike to understand current invoice status; these challenges meant that the customer wasn’t able to realize all early payment discounts.
Early Pay Discounts
A key desired outcome of this project was to deliver increases in Early Pay Discounts, a discount that sellers offer to buyers to encourage paying invoices early. These discounts commonly take the form of “2/10, net 30” which means that the buyer may deduct 2% of the amount owed if the vendor is paid within 10 days instead of the normal 30 days. (To learn more about payment terms, here’s a good summary from Taulia, What are Dynamic Payment Terms?) These discounts can add up and, in the case of our customer, were able to “pay off” this project in less than a year.
Integrate Enterprise Applications
To integrate these systems (e.g. SAP, VIM, Taulia, and Vertex), Infospire used its extensive integration experience and expertise with SAP and with OpenText Extended ECM for SAP to offer a low-risk integration strategy.
SAP offers a tax engine as a feature of their ERP solution, but our customer had already invested in Vertex to automate tax rate calculation in their vendor invoice processing. To reduce complexity and risk, Infospire delivered an integration within OpenText VIM to connect with Vertex. For each invoice, VIM invokes an SAP API passing data such as the shipping and receiving locations and the vendor’s company code. Now, SAP simply passes the data it received from VIM to Vertex, and Vertex in turn returns the optimal tax rate for the jurisdiction and the product. It’s all seamless and end-users are completely unaware of the work going on behind the scenes.
Figure 2 – SAP-Vertex Integration (https://api.sap.com/odata/1.0/catalog.svc/Files(‘d1a7cc22c3774ae486126d241c832659’)/$value)
Similarly, Infospire integrated with Taulia using Taulia’s REST API: when changes occur to invoice status in SAP, such as when an invoice is approved, that information is now passed to Taulia. Essentially, this integration keeps the Taulia Vendor Portal updated as to the latest invoice status. As our customer reports, vendors no longer routinely call buyers seeking an update on invoice payment; instead, they access the Taulia Vendor Portal at their convenience. Clearly a win-win: our customer no longer spends time chasing internal approvals and their vendors no longer chase our customer’s buyers.
So there you have it: SAP, VIM, Taulia, and Vertex tightly integrated and delivering early pay discounts day in and day out.
Early pay discounts have increased 40% and invoice processing cycle time has dropped from about 18 days to 10 days. Best of all? Invoices are reviewed and approved with minimal intervention from Accounts Payable – approving managers now have all the information they need presented in the invoice approval app, making it far easier and quicker to review and approve invoices.
Want to increase your early pay discounts, decrease your invoice processing time and increase end-user satisfaction, all at the same time? We’d welcome the opportunity to share our expertise and experience with you and help you achieve similar results too.
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