Operational efficiency isn’t the only obsession with accounts payable today. As top performers streamline invoice processing, the next step is to help their finance organizations manage cash better by combining early payment discounts with a payment term extension program. In this session, you will learn how you can mine profits in accounts payable from early payment discounts while supporting treasury’s goal to improve working capital. The ability to maintain or extend days payable outstanding (DPO) and expand the discount pool is one of the great, untapped opportunities in all of corporate finance. Key takeaways: - Compressing the invoice processing cycle has a dramatic impact on how organizations manage their cash - Dynamic discounting presents new ways to capture discounts, through real-time collaboration and sliding rate scales up to the net invoice term - Payment terms rationalization and extension in conjunction with an early payment discount program deliver cost savings and increased returns on cash while also allowing you to maintain or extend your DPO Presentation delivered at ProformaTECH 2014 - http://www.proformatech.com Track: Operational Advantage | Session: 2 Speaker: David Bennett, Senior Manager, Working Capital Consulting, Ariba

1. Show Me The
Money: Driving
World-Class Cash
Management
David Bennett
Director, Financial Solutions
Ariba, an SAP company

2. Working Capital Management Overview
• Business Context For Working Capital Management & Early Payment
Discounting
• Working Capital Tools
• New Potential from Dynamic Discounting
• Developing an Effective Working Capital Program
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3. Cash Conversion Cycle = Operational Efficiency
Why DIO, DSO and DPO Matter
DIO
(Days Inventory Outstanding)
DSO
(Days Sales Outstanding)
DPO
(Days Payables Outstanding)
CCC
(Cash Conversion Cycle)
$ Inventory $
Reduce
$ Receivables $
Reduce
$ Payables $
Increase
$ Working
Capital $
Reduce
Goal: Reduce Working CapitalFree up Cash
Goal: Maximize Returnon Cash
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4. Working Capital Tension
Situation - Objectives of Buyers and Suppliers
Suppliers
Buyers
Payment Terms Stretched
Historic Cash Reserves: $1.9T+*
Low Interest Rates: 0% - 0.3%
Investor pressures for greater
returns
Supply Chain Risk
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Working Capital Tension
Limited bank credit
Low visibility into cash flows
Cash flow is critical

5. Working Capital Tools for DPO/DSO
• Multiple options are available – Diversify
• You can employ ALL options – Not mutually exclusive
• Combining discount savings + DPO improvement – Technology & Managed Services
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6. Automation and Dynamic Discounting
3%
10
20
Monetize Idle Payables
Days
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Approvals
Paper
Approvals
e-Invoice
Discount Rate
1%
Invoice
Reduce
Cycle Time
2%
6
• Compress cycle time, maximize discount window
Avg eInvoice cycle time is 4-6 days
• Monetize idle payables
88% of invoices sit idle until due date¹
• Put payables cash to greater returns
Early payment discounting returns 24% Avg APR
• Optimize terms to balance DPO
Rationalize terms & industry benchmark
¹Source: PayStream Advisors
30
60

7. Maximize Discount Capture: Flexible, Pro-Rated, Self-Service
Buyer Offers
Early
Payment?
Yes
“Your
invoice is
approved.
Supplier
Needs
Cash?
No
Wait for payment at
maturity date.
Yes
“I want to get paid early
every time!”
Yes
Yes
It will be
paid at this
date in the
future.”
Yes
Yes
No
7
Yes
Yes
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Supplier Response
Dynamic Discount
Type
25%
“I want to pick the
invoice(s) I want paid
early, and choose when
to be paid.”
“I want to be paid early,
but I want to make a
counter-offer to the rate
my Buyer has offered!”
“I want to offer up an
early payment
discount.”
-
20%
Automatic
Opportunity
15%
Ad hoc
10%
Visibility
Recent studies show
50% of pre-negotiated
discounts are
never captured¹
¹Source: Aberdeen
5%
Ad hoc
(Supplierinitiated)
Capability

8. Developing an Effective Working Capital
Program
8

9. Three Pillars to Discount and WCM Success
Technology
+
• Dynamic discounting
Daily Discount Rate
Scheduling & Calculation to
complement ERP/FI
• Cash Optimizer
Identify opportunities for
cash acceleration with
customers
• Program Configurator
Define discount rate groups,
amount of cash to use, and
which suppliers to include
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Experience / Insight
• Size of B2B network
Leverage scale and insight to
offer/set proper payment
terms with suppliers
• Market Knowledge
Insight to incentives, category
intricacies and financial
capabilities to target and
maximize returns
• Balanced Approach
Customize program to cash
return and DPO
requirements
+
Capabilities
• Proven Methodology
Target, onboard, and support
suppliers throughout the lifetime
of the contract
• Rapid Ramp
Reduce risk and earn early stage
discounts during deployment
phase
• Performance Measurement
Establish benchmarks, goals and
measure targets against your
stated objectives
• Ongoing Account Mgmt
Full Services & Maturity Mgmt
for life of contract

10. WCM Program Methodology
Accelerate Your ROI – OneOK
enrolled $2M in discounts prior to
technical implementation utilizing
RapidRamp
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•Approach from a holistic working capital perspective that drives discounts, improves
DPO and balance sheet.
Monetize all spend across platforms
Understand client’s working capital goals (discounts only or improve working capital?)
• Peer Benchmarking
• Supplier liquidity analysis
• Analyze spend and provide recommendation
Pay terms rationalization, industry statistics, network intelligence
• Design a program that offers varied rates to incent supplier participation across all
spend sizes and categories
• Position a balanced message to suppliers
Constancy of payment
Standardization of pay terms
More flexibility for suppliers to manage their own short term cash needs
• Incorporate extensive marketing to supplier base
Personnel changes – always ensure we have the right audience
Seasonal changes – quarter end/year end cash driver
Future liquidity changes
• Program requires lifetime management
Institutionalize early payment terms and grow organically

11. Average Client Discount Performance
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12. Suppliers Benefit From Early Payment Program
“When we submit paper invoices, it can take
a long time to get our invoices approved. With
Ariba, we get paid as quickly as four days,
and the visibility into payment status is
like gold.”
Joy Stoelting, Studio Manager, Big-Giant
“By submitting invoices over the Ariba
Network, we have improved our cash
forecasting and seen a dramatic increase
in prompt payments. The substantial DSO
improvement is a huge advantage in this
difficult economy. ”
Trish Jackson, AR Mgr, Photo Craft
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• ATM for Receivables
• Automatic & Ad Hoc Early Payment
- Early payment on demand
- Opt in/out at any time
• Reduces DSO
• Non-Debt Cash Flow
• Control over timing and amount

13. Are You Ready?
1. Does your company have strong cash balances?
2. Are less than 10% of your suppliers/spend currently
discounting?
3. Do you have inconsistent terms or terms >45 days?
4. Can you process some/all invoices quickly?
5. Do you have other Working Capital initiatives in place
(Card, Factoring, SCF)?
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14. &
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15. Thank You For Attending
Show Me The
Money: Driving
World-Class Cash
Management