Picture yourself at the helm of a thriving enterprise, navigating an exciting period of growth and expansion. Yet, beneath the surface, the unease of not knowing the short-term liquidity position to finance operations lingers. The working capital squeeze is often from mismatched payment terms with customers and suppliers, with some payments perennially delayed, making it hard to be absolutely certain about short-term to mid-term working capital. The situation can be fixed, but doing so manually is nearly impossible with the volume and complexity of data.
Welcome to the world of Payment Term Optimization, a strategic process that aims to enhance working capital by optimizing payment terms. It involves analyzing contracts and invoices to avoid premature payments, mitigate penalties, and strategically negotiate early payment discounts, enabling companies to unlock significant financial opportunities.
ElectrifAi's PaymentTermOptimizationAi enables enterprises to effectively strengthen working capital by optimizing payment terms, maximizing available cash, and bolstering financial stability. This innovative solution analyzes contracts and invoices to prevent penalties, ensure timely payments, and negotiate more favorable discounts, ultimately improving liquidity. The solution provides a comprehensive understanding of payment processes while concurrently optimizing and standardizing payment terms to accommodate the varied needs of an organization. Some of the key features and benefits of the solution are:
• Optimize payment terms to improve working capital by paying as agreed, avoiding early payments unless prioritized, and penalties from late payments.
• Strengthen vendor relationships by identifying missing/bad payment terms early and building credibility with timely payments. Reduce administrative burden by standardizing payment terms across vendors.
• Increase flexibility by identifying and using early pay discounts. Negotiate attractive discounts to maximize cash flow. Prioritize business-critical payments to avoid disruptions.
• Easy data processing from any ERP or financial accounting system. Flexible deployment with choice of on-premises or hosted as-a-service options.
PaymentTermOptimizationAi stands out as a game-changing solution due to its ability to extract valuable insights from payment terms using merely purchase orders (PO), invoices, and payment data. When contracts are also available, the solution generates even deeper insights. Here’s how enterprises can unlock significant savings opportunities and streamline their payment processes, leading to greater financial stability and success.
The future of finance is all about precision, speed, and accuracy. And AI and ML-enabled Payment Term Optimization is the key to unlocking this future. As we move toward a more data-driven business landscape, companies that adopt these technologies will be better positioned to navigate the challenges and seize opportunities in the global marketplace. By embracing these technologies, enterprises can unearth new value in their financial data, improve relationships with suppliers, and propel their operations towards greater efficiency and profitability.
For example, here’s how ElectrifAi helped a global chemicals manufacturer optimize their payment terms to streamline their payment processes and unlock significant savings opportunities, leading to greater financial stability and success:
The company had close to $3 billion in spend in a specific category. They had over 200 different payment terms, ranging from NET 0 to NET 150 with some based on specific dates in a month. However, the volume and complexity of data made it nearly impossible for them to achieve this objective quickly and efficiently. Our analysis revealed that 8%-9% of spend lacked payment terms stated on the PO, and 3% to 5% of spend included a payment term offering early payment discounts of up to 5%. If the client had made early payments, it could have resulted in a saving of $3 million. If all long-duration payment terms were negotiated to include a 2% early payment discount, the total potential discount would reach approximately $80 million. Using PaymentTermOptimizationAi, we helped the client achieve $80 million savings potential by negotiating early payments discounts, $3 million potential savings from available early payment discounts, and an opportunity to boost working capital for greater financial stability, efficiency and profitability.
With better cash flow management, C-suite executives can now enable their businesses to stay agile, make smart investments, and respond quickly to new opportunities. It's time to let go of the old ways of managing payment terms and embrace the future with AI and ML technologies. Those who recognize this and invest in pre-built AI and ML solutions will not only reap the benefits of improved financial performance but also position themselves as leaders in their respective industries. Now that’s what we call an AI-powered consequential impact, that too in just 6 – 8 weeks!
Get in touch with us to know how PaymentTermOptimizationAi can pave the way to profitability and efficiency in your business operations.
ElectrifAi: US' leading ML solutions provider
ElectrifAi is one of the US' leading ML solutions providers, with an extensive library of pre-built ML solutions enabling our clients to capture tangible benefits quickly. We work with the C-suite to understand and solve business problems through data and machine learning in diverse industries such as Higher Ed, BFSI, Life Sciences, Hospitality, Retail, Chemicals, Oil & Gas, Telecom, Insurance, etc. The insights generated by our ML solutions, such as HigherEdAi, SpendAi, ContractAi, HospitalityAi, RevCaptureAi, and InspectionAi, have helped our clients realize savings in 6-8 weeks.
Our solution does not require investment in a new platform or infrastructure. Instead, we leverage the data existing in your system to power the ML models to deliver business outcomes.
We are the last-mile solution that sits on the top to solve specific business problems and bring about savings. Contact us to learn more!