[Global] The reason more than half of SaaS firms refuse early payment discounts

A common practice among suppliers and vendors to incentivise their customers to pay their invoices on time is to offer early payment discounts. However, research by PYMNTS has revealed that many software-as-a-service (SaaS) firms encounter errors and delays when paying their suppliers, even though they are as liable as those in any other industry to be offered early payment discounts, PYMNTS reports.

A closer look into how these firms currently manage non-payroll spending - and the payment of supplier invoices in particular - showed that such firms too frequently rely on time-consuming and inefficient manual processes.

One primary advantage of using such a spend management system is automation, which reportedly reduces data errors and enables SaaS firms to pay suppliers in a more timely fashion, allowing them to receive early payment discounts. Nearly half of all SaaS firms surveyed report that they have received a discount for early payment from suppliers in the last 12 months. But two-thirds of SaaS firms surveyed that currently use a non-payroll spend management system report receiving a discount for early payment. 

The clear implication is that reducing both labour costs and non-payroll spending while taking advantage of early payment discounts empowers SaaS firms to improve their financial performance and drive growth.

The research - Improving Financial Performance: Taking Advantage Of Early Payment Discounts - is a PYMNTS and Airbase collaboration. It examines discounts for early payments, exploring their nature and usage, the types of companies that take advantage of them and their importance for those firms. 

PYMNTS surveyed 225 executives with deep knowledge and leadership responsibilities in accounts payable (AP) departments at SaaS companies with 100 to 1,500 employees between May 18 and June 6 to explore how an automated system can streamline non-payroll spend management and improve financial performance.

Key findings

• Close to half of all firms surveyed experience data entry errors when managing non-payroll spending, with an average of 10 per cent of payments to suppliers requiring adjustments due to processing errors: These frictions most affected small firms in the last year. Errors and inaccuracies are significant problems in the space. PYMNTS found that 47 per cent of firms currently face data entry errors when managing non-payroll spending, and 20 per cent of executives surveyed reported that the errors are their biggest challenge. On average, 1 in 10 payments to suppliers needs adjusting for SaaS firms. For 37 per cent of firms, these payments represent more than 10 per cent of total payments made to suppliers in the last 12 months.
• Using a spend management system helps SaaS firms pay suppliers in a timely manner and receive early payment discounts: While 47 per cent of all SaaS firms received a discount for early payment from suppliers in the last 12 months, two-thirds of those firms using a non-payroll spend management system received a discount. Discounts for early payment are quite common and the discounts can reportedly be large. Close to half of all firms have been offered some type of discount, with 26 per cent receiving discounts for up to 10 per cent of their payment obligations in the last 12 months and another 21 per cent receiving discounts for more than 10 per cent. Larger firms are more likely to be offered a discount for early payment than smaller firms; at 56 per cent and 39 per cent, respectively.
• Despite 47 per cent of all SaaS firms receiving a discount for early payment, few firms take this discount all the time: Only 24 per cent of executives at SaaS firms that have been offered early payment discounts said they took advantage of them all the time, while 22 per cent said they take these discounts more than 75 per cent of the time, but not each time. Just 4.8 per cent of companies said they have never taken advantage of them. Larger firms take these discounts more often than smaller firms, while firms that do not have a spend management system are more likely to lose discount opportunities.

For further details on how SaaS solution providers use a non-payroll spend management system to receive early payment discounts, the report is available for download here.

Source: PYMNTS

(Link via original reporting)

A common practice among suppliers and vendors to incentivise their customers to pay their invoices on time is to offer early payment discounts. However, research by PYMNTS has revealed that many software-as-a-service (SaaS) firms encounter errors and delays when paying their suppliers, even though they are as liable as those in any other industry to be offered early payment discounts, PYMNTS reports.

A closer look into how these firms currently manage non-payroll spending - and the payment of supplier invoices in particular - showed that such firms too frequently rely on time-consuming and inefficient manual processes.

One primary advantage of using such a spend management system is automation, which reportedly reduces data errors and enables SaaS firms to pay suppliers in a more timely fashion, allowing them to receive early payment discounts. Nearly half of all SaaS firms surveyed report that they have received a discount for early payment from suppliers in the last 12 months. But two-thirds of SaaS firms surveyed that currently use a non-payroll spend management system report receiving a discount for early payment. 

The clear implication is that reducing both labour costs and non-payroll spending while taking advantage of early payment discounts empowers SaaS firms to improve their financial performance and drive growth.

The research - Improving Financial Performance: Taking Advantage Of Early Payment Discounts - is a PYMNTS and Airbase collaboration. It examines discounts for early payments, exploring their nature and usage, the types of companies that take advantage of them and their importance for those firms. 

PYMNTS surveyed 225 executives with deep knowledge and leadership responsibilities in accounts payable (AP) departments at SaaS companies with 100 to 1,500 employees between May 18 and June 6 to explore how an automated system can streamline non-payroll spend management and improve financial performance.

Key findings

• Close to half of all firms surveyed experience data entry errors when managing non-payroll spending, with an average of 10 per cent of payments to suppliers requiring adjustments due to processing errors: These frictions most affected small firms in the last year. Errors and inaccuracies are significant problems in the space. PYMNTS found that 47 per cent of firms currently face data entry errors when managing non-payroll spending, and 20 per cent of executives surveyed reported that the errors are their biggest challenge. On average, 1 in 10 payments to suppliers needs adjusting for SaaS firms. For 37 per cent of firms, these payments represent more than 10 per cent of total payments made to suppliers in the last 12 months.
• Using a spend management system helps SaaS firms pay suppliers in a timely manner and receive early payment discounts: While 47 per cent of all SaaS firms received a discount for early payment from suppliers in the last 12 months, two-thirds of those firms using a non-payroll spend management system received a discount. Discounts for early payment are quite common and the discounts can reportedly be large. Close to half of all firms have been offered some type of discount, with 26 per cent receiving discounts for up to 10 per cent of their payment obligations in the last 12 months and another 21 per cent receiving discounts for more than 10 per cent. Larger firms are more likely to be offered a discount for early payment than smaller firms; at 56 per cent and 39 per cent, respectively.
• Despite 47 per cent of all SaaS firms receiving a discount for early payment, few firms take this discount all the time: Only 24 per cent of executives at SaaS firms that have been offered early payment discounts said they took advantage of them all the time, while 22 per cent said they take these discounts more than 75 per cent of the time, but not each time. Just 4.8 per cent of companies said they have never taken advantage of them. Larger firms take these discounts more often than smaller firms, while firms that do not have a spend management system are more likely to lose discount opportunities.

For further details on how SaaS solution providers use a non-payroll spend management system to receive early payment discounts, the report is available for download here.

Source: PYMNTS

(Link via original reporting)