Turning payables into an engine for growth

In a recent session at SAP Connect, SAP Taulia’s Thomas Mehlkopf discussed how multinational businesses can turn their payables into a source of profit and an engine for sustainable growth.

For multinational businesses, today’s landscape is being shaped by economic uncertainty, supply chain complexity, and the pressure to grow.

While cash may be king, for many companies it is currently trapped in inefficient working capital cycles. But what if you could turn your payables from a cost center into a strategic engine for growth?

There’s no denying that traditional approaches to payables leave much to be desired. Static payment terms are negotiated once, and then left untouched for years. Manual processes eat up time, generate unnecessary costs, and leave your firm at risk of errors.

Worse still, all of this puts a constant strain on your most valuable asset: supplier relationships.

Replace rigidity with flexibility

Fortunately, there’s another option. By moving towards a modern, AI-driven strategy, you can replace rigidity with flexibility, and turn your payables into a strategic gool for funding growth.

SAP Taulia offers a suite of solutions embedded into your SAP ecosystem that can transform the way you manage working capital:

• Dynamic Discounting allows you to use your own cash to pay suppliers early in exchange for a discount. By using AI to analyze your cash position, cost of capital and supplier behavior, the solution optimizes the timing and the discount amount to maximize your risk-free return on cash.

• Supply Chain Finance uses third-party funding to pay your suppliers early and extend your payment terms, thereby improving your cash flow and strengthening your balance sheet. Suppliers gain fast, affordable access to cash, while you preserve your own working capital.

• Virtual Cards automate supplier payments through a secure, seamlessly integrated experience within your ERP system and the SAP Business Network. This delivers faster transactions that enhance working capital and operational efficiency.

The real power here is flexibility. For example, if you have excess cash at the end of a quarter, you can instantly deploy it via Dynamic Discounting to boost your margins. The next quarter, if you need to preserve cash for a capital investment, you can switch to Supply Chain Finance.

By switching between these strategies in line with your liquidity position and strategic goals, you can use your payables to fund growth, improve EBITDA, and even drive critical ESG initiatives.

So far so good – but what does this look like in practice? The following three case studies illustrate some of the ways companies are unlocking the potential of their payables.

Case study 1: Turning the treasury function into a profit center

A major telecommunications company had a clear mandate from the board: to achieve ambitious cost savings of $10m in year one, scaling to $20m annually.

While the company had cash, it was sitting idle in bank accounts and earning minimal returns. Manual processes made it impossible to run an efficient early payment program at scale.

The company turned to SAP Taulia’s Dynamic Discounting program, both because of its deep SAP integration and the AI-driven business case analysis. The program was rolled out with widespread adoption, with 420 suppliers enrolled in just eight months.

The success of the program was phenomenal. The program achieved a strong 7.4% weighted average APR, allowing the company to earn a consistent, risk-free return on cash that had previously been underutilized.

As a result, the company exceeded its targets, achieving $14.8 million in discounts in the first year, and $21.7 million in year two.

Case study 2: Incentivizing suppliers to meet ESG standards

The second company – a multinational automotive manufacturer – needed to support an ambitious corporate sustainability agenda, including achieving a fully sustainable supply chain. The challenge was to move beyond audits and scorecards, and incentivize suppliers to meet specific ESG standards.

To achieve this, the company adopted a combined Dynamic Discounting and Supply Chain Finance program, built on the SAP Taulia platform. By segmenting its supplier base, the company was able to identify suppliers that met its ESG criteria, and use the platform to offer them preferential, lower-cost rates for early payment – thereby creating a financial reward for sustainability.

With high supplier adoption, the business was able to use its financial supply chain to drive its ESG goals, while improving its own working capital position and strengthening its balance sheet.

Case study 3: Achieving a unified working capital strategy

Pharmaceutical firm Pfizer’s treasury team was looking to align its cash optimization efforts with the procurement team’s focus on supplier relationships and value.

However, this effort was hampered by a fragmented systems landscape, including regional bank portals and legacy fintech platforms. Global suppliers had to navigate multiple portals and sign different contracts for different regions – and it was difficult to create a unified working capital strategy across treasury, procurement and finance.

To address these challenges, Pfizer consolidated its enterprise onto SAP, creating a global source of truth for all data. The company also integrated SAP as its single, global fintech platform.

As a result, Pfizer is now able to decide whether P&L or balance sheet improvement is more critical at any given time, and deploy Dynamic Discounting, Supply Chain Finance and Virtual Cards as needed.

The company’s suppliers benefit from a streamlined, simple experience through a single portal. They are also able to access early payment at a more favorable financing rate, tied to Pfizer’s strong credit rating – which provides a boost to their liquidity and builds goodwill.

Liquidity as strategic asset

These three stories provide a snapshot of how different companies are using tailored approaches to liquidity in order to achieve different business objectives.

After all, liquidity isn’t just about keeping the lights on – it’s also a strategic asset that can help companies achieve their growth ambitions. And AI-driven technology is the key to unlocking this value.

With the right tools at their fingertips, companies are better positioned to realize their strategic goals, whether that means funding an R&D project, enhancing efficiency or building a more sustainable supply chain.

Whatever your priorities, SAP Taulia provides the technology, flexibility and expertise to help you control and maximize your liquidity.