In this series I wanted to focus on a few of the ‘newer’ technology providers in this space and their solutions around dynamic discounting. Although providers such as Ariba and ADP do offer this capability, over the last 5 years this market has attracted some new entrants and they have gained significant traction within a fairly short period of time. The companies I’m talking about are – Taulia, C2FO, and Tradeshift (who very recently announced dynamic discounting functionality). Today’s focus will be Taulia.
Taulia started off as a provider of dynamic discounting solutions and has since expanded its offering into eInvoicing, a supplier portal and supply chain finance. Odd place to start you might think, but in fact starting with dynamic discounting was a great place to start. The strategy was a smart one:
1) Develop sophisticated dynamic discounting capabilities to work on 100% of invoices regardless of what format they are received and processed in
2) Ensure seamless integration with SAP (Taulia is an SAP certified SaaS platform), and
3) Quick time-to-value for customers via early payment discounts which can help to fund other AP automation initiatives.
As I’ve talked about many times dynamic discounting is a method of optimizing working capital. For those that are new to it, dynamic discounting is a program (best carried out through the use of technology) that allows buyers and sellers to dynamically alter the standard terms of payment. The basic component of a dynamic discounting program is the ability for the buying organization to offer early payment for a stated discount to its suppliers. The challenge is often one of timing, when a buyer has cash reserves and wants to pay an invoice early, a supplier may not be willing to take a 2% cut because they don’t have a need for cash and vice versa.
Effective dynamic discounting programs are typically enabled and managed using an automated solution that help to manage the discount offers and negotiation activities. In some cases, organizations will have the ability to set up rules that make/accept a standard discount offer based on certain requirements. As is expected, suppliers’ cash needs can change based on time of year, industry, customer, etc. At the same time, availability of excess cash on the buyer side will also fluctuate.
Where does Taulia fit in?
Taulia provides cloud-based eInvoicing, a self-service supplier portal, data capture service (i.e., OCR in the cloud) and of course dynamic discounting. Suppliers can submit invoices in PDF form, through the supplier portal, by flipping PO’s into invoices, EDI, XML or upload invoices in various formats. They can also create non-PO invoices via a web-form. Invoices that are submitted as PDF files (as many are today) go through a data extraction and verification process before going into the system. Any discrepancies in the OCR capture process are verified by the supplier before being sent to the buyer. Taulia is made available directly in the SAP environment (soon other ERP systems as well). This makes all invoices and PO’s visible to the relevant suppliers, not just those that were submitted electronically.
Typically, a client will have a certain amount of cash available to put into a dynamic discount program and will look for a certain return on it. After determining which suppliers/regions they want involved, customers can use Taulia’s supplier enrollment service to onboard those suppliers. Suppliers have some pretty neat functionality, for example, “Cash Planner” allows the suppliers to select the amount and date by which they would need cash by. Cash Planner then returns a list of invoices for which early payment can be requested. Whether the buyer or the suppliers requests a nearly payment, if the other party accepts, Taulia automatically changes the invoice due date in the ERP system. Pricing for Taulia is a subscription model or a revenue share model and free for suppliers.
Overall, Taulia has already made some great strides and is positioned well for the future. In August 2013, Taulia raised $18 million in Series C funding, led by German investor Klaus Hommels and joined by previous investors Matrix Partners, Trinity Ventures, TELUS Ventures and DAG Ventures. This brings Taulia’s total funding to $36 million.
