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What's That You Say? Paying Bills Quickly Really Pays Off

For some companies, the ROI on EIPP comes faster and bigger than expected

By Richard Gamble | Updated on August 01, 2004

When Topeka-based Payless ShoeSource Inc. decided to automate its supply chain by using a payer-centric electronic invoice presentment and payment (EIPP) solution from Xign Corp., it predicted that the budget for accounts payable would drop significantly. And it did: The company has been able to cut its A/P staff, from 21 to 17 full-time equivalents.

What Vic Nation, manager of accounts payable and receivable at Payless, didn’t quite factor in was how substantial the savings would be for the discount shoe seller given the simple reality that it now was able to pay its bills on time and therefore take advantage of prompt-pay discounts it used to miss. In fact, by using a Xign feature called “Discount Manager” and extending its standard terms from 30 to 45 days, Payless could even expand those savings by encouraging suppliers that didn’t normally offer discounts to give one in return for immediate payment–or by paying slower when they did not. “Those discounts bring a much higher effective return on our cash than we could get from paying later and investing the money at today’s low rates,” Nation observes.

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