Chemicals
Optimizing payment terms for a global chemicals manufacturer using merely PO, invoice, and payment data
The client is a leading global chemicals manufacturer with close to $3 billion in spend in a specific category. The client had over 200 different payment terms, ranging from NET0 to NET150 with some based on specific dates in a month. The client saw the potential of saving money by optimizing payment terms, but the volume and complexity of data made it nearly impossible to do this quickly and efficiently.
Using PaymentTermOptimizationAi, ElectrifAi showed the client the potential to streamline their payment processes, unlocking significant savings opportunities and boosting greater financial stability and success. 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. In most cases, the client could realize immediate savings and work towards standardizing terms with key suppliers.
