Procurement can have a significant impact on financial results, negotiating beyond price reduction while strengthening both the supply chain and supplier relationships. Learn how procurement can use payment terms to increase savings and income for the company via early payment discounts or help the company increase DPO and cashflow. Find out how these strategies are helping procurement partner with the CFO to support corporate goals such as growth, innovation, R&D, and financial objectives.

1. PUBLIC
Phil Beck
GM, Payments & Financing
Key Strategies for Procurement to
Increase Savings and Contribute to
Strategic CFO Goals

2. 2PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Procurement Embracing New Realities
Procurement Supporting CFO and Corporate Strategic Goals
Value of Timing Payment
Getting Started at Your Company
Agenda

3. 3PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Procurement professionals are embracing new realities
“Old thinking” “New thinking”
• Procurement measured on price savings
• Mandates aimed AT suppliers
• Invoices are liabilities: Effectively and
economically process and pay
• Business functions working in silos
• Procurement measured on economic value add
(EVA)
• Innovation and improvements WITH suppliers
• Invoices are strategic assets: Fair market
payment terms to determine discounts / cash-flow
• Silos removed: Tight alignment / key
performance indicators (KPIs) across business
units, finance, and IT

4. 4PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
How is the working relationship between A/P, procurement, operations, treasury, and IT?
 Good/great
 Neutral
 Needs improvement
Group survey question #1

5. 5PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Cash flow is the oxygen of any business
Purchasing gas
Immediate cash payment gets a
discount over credit card payment
Your household
Imagine paying all your bills
1 year later
Payroll
Consistency of payment
matters to employees
“Cash...is to a business as oxygen is to an individual: never thought about when it is present, the only thing
in mind when it is absent.”
– Warren Buffet

6. 6PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Procurement’s evolving role helps achieve business objectives
Growth
Building new stores, entering new
markets, mergers and acquisitions
Innovation
Increasing R&D spending
Financial
Paying down debt, stock buy-back,
margin expansion
Business objectives Procurement’s evolution
Adding value beyond price reduction
Alignment with treasury and A/P to increase cash
flow and return on cash
Strengthening supply chain and supplier relationships

7. 7PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Financial impact of payment terms on $1B annual targeted spend
$1M–$2M
Estimated annual savings
via early payment discounts
$40M–$80M
Increased A/P balance via
extending payment terms
$40M–$80M
Estimated cash flow benefit

8. 8PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Who gets the credit for payables working capital savings?
 Treasury
 Procurement
 Accounts payable or shared services
 “It depends”
Group survey question #2

9. 9PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Why stakeholders care about timing of payment
Increase
cash flow
12%–36% risk
free return
Secure bank
account management
CFO and
treasurer
Chief
procurement
officer
CIO
Strengthen supply chain
and supplier relationships
Economic value-add
beyond price reduction
Payment visibility
for suppliers
Payables enables
business objectives
Growth: Building new plants
or stores
Innovation: Increasing R&D
spending
Expansion: Entering new
markets or regions
Financial: M&A, pay down
debt, dividendsLow total
cost of ownership
1 platform:
source to settle
Nominal change
management

10. 10PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Payables differentiators with SAPBanks and funders
Invoice visibility
and working capital
options
Network payables with SAP
One global platform for payables working capital
Integrated banking and payment networks deliver payables working capital capabilities on the world’s largest B2B network
Global multibank
financing platform
Global funding network
60+
Funders
70+
Countries
2M+
Suppliers
Procurement Supply chain
Fair market payment terms:
supply chain finance, discounts
Multiple capabilities
Data-driven
analysis
Terms extension
services
Ongoing program
management
Program services
Supplier discounts:
static, dynamic, ad hoc
Dynamic discounts
Program design,
execution, training,
and onboarding
Dedicated services
Payment terms
Balance buyers extending payment
w/ suppliers accelerating payment
Supply chain finance

11. 11PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Who is or would be the best executive sponsor for a payables working capital initiative at your
company?
 CFO
 Treasurer
 Chief procurement or supply chain officer
 VP shared services or head of accounts payable
Group survey question #3

12. 12PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
 Step1: Define initial benefit to educate and excite colleagues
 Step 2: Governance: Who is the executive sponsor? “Day-to-day” lead?
 Step 3: Distribute agenda for initial cross-functional team meeting
Now what . . . playbook to getting started

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