Companies that deploy a non-payroll spend system not only gain efficiency and cost-saving benefits, but also earn early payment discounts more frequently than firms that aren’t equipped with this technology.
By helping firms pay their suppliers and vendors promptly, these systems allow them to earn the discounts that are offered when they promptly pay the invoices they receive, according to “Improving Financial Performance: Taking Advantage Of Early Payment Discounts,” a PYMNTS and Airbase collaboration based on surveys of 225 executives at software-as-a-service (SaaS) companies.
In fact, while 27% of firms that use a spend management system say they take advantage of early payment discounts offered by suppliers “all the time,” only 15% of companies without such a system say the same.
What’s more, 8% of firms without a system report that they never take advantage of these discounts, while only 4% of those with a system say the same.
Relying on Time-Consuming Manual Processes
What’s keeping firms from taking advantage of these discounts? Errors and delays resulting from the ways firms manage their non-payroll spending, the report found.
The firms that fail to garner the discounts that are commonly offered by suppliers and vendors often rely on manual processes that are time-consuming, inefficient and error prone.
In fact, 20% of executives reported that data entry errors are their top challenge.
“It all starts with errors,” Airbase Vice President of Business Development Dan DeVall told PYMNTS in an interview posted Nov. 8. “As errors become more prevalent, they need to be identified and corrected, and the hassle of manual processes around addressing those errors [creates] a ton of time wasted with reconciliation.”
For this and other reasons, DeVall said, getting the accounts payable (AP) process under control has become a top mission for many businesses.
Paying Suppliers in a Timelier Fashion
A key advantage of using a non-payroll spend management system is automation, which reduces data errors and enables firms to pay suppliers in a timelier fashion, the report found.
An automated spend management system can streamline the processes related to firms’ payments to their suppliers and vendors, reduce data processing errors and assist firms’ AP teams in paying suppliers before the invoice is due.
By embracing automation offering compliant approval workflows and real-time reporting, DeVall told PYMNTS, “You can lean on integrations to be able to capture and store and ultimately share data across the entire business. You can also smooth out a compliant process. You can also drive hard dollar savings around cash benefits.”
This, in turn, allows accounting departments to optimize card spend and increase things like cash rebates to the business, DeVall said.
As those with an automated spend management system have found, taking advantage of discount opportunities helps firms reduce costs, improve their bottom lines and drive growth.