Tuesday 3rd March 2015
Ariba is the biggest player in the e-invoicing market. According to its 17 February 2015 press release:
More than 1.7 million companies, including two-thirds of those on the 2014 Forbes Global 2000 list, are connected to Ariba Network. And a new company is added every 13 minutes. In 2014 alone, 200,000 selling organizations joined the network, where more than $700 billion in commerce is transacted on an annual basis.
Ariba is also tapping into the invoice discounting market. It's partnering with buyers to pay suppliers early. Supplier gets cash early. Buyer gets a better return than sight deposits. Ariba gets a cut.
|Ariba Discount Management and Dynamic Discounting offering|
It would seem that from $700 billion in invoice value, Ariba saw $10 billion of invoices discounted in one year; or 1.4%.
From that $10 billion, Ariba's customers captured $150 million in discounts. This is not an insignificant sum but totals 1.5% of total discounted invoice value. That 1.5% looks like it went to the capital providers, i.e. the buyers.
As the broker/platform/service provider, I reckon Ariba probably receives a lesser cut than the underlying capital provider. Most likely something in the order of 0.25% to 0.5%. Twenty five to fifty basis points on $10 billion in discounted invoice value equates to $25 million to $50 million (c. £16 to £32 million).
Or put another way, Ariba's cut from early payment services might be something like 0.003% to 0.007% of the original $700 billion in invoice value flowing over its network.
Tungsten reported £117 billion in invoice value for 2014. You do the math.
Of course Ariba are not the only players in the market having a go at this invoice discounting malarkey.
|Basware Financing Services offering|
|Taulia Dynamic Discounting offering|
|Tradeshift Early Payment offering|
|Nipendo Supplier Financing solution|
|GT Nexus Supply Chain Finance offering|
|Transcepta Supply Chain Finance and Dynamic Discounting offering|
|TradeRocket Early Payment offering|
|Direct Commerce Discount Management offering|
The list goes on ...
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