Case Study: American Electric Power boosts early-payment discount savings with SAP Ariba Payables

American Electric Power Funding the Procure-to-Pay Program with Early-Payment Discount Savings

American Electric Power, one of the largest electric utilities in the United States, sought to streamline its procure-to-pay operations and optimize its working capital. In a joint effort across its procurement, accounts payable, and treasury departments, the company faced challenges of non-standard payment terms and a desire to increase cash earnings through early-payment discounts. They turned to vendor SAP for a solution using the discounting capability of the SAP Ariba Payables solution.

SAP's solution enabled American Electric Power to consolidate over 150 different payment terms down to just four and to aggressively pursue early-payment discounts. As a result, the company substantially increased its discount savings in the first year and extended its days payable outstanding by two days. These significant cost savings were then used to help fund the utility's larger procure-to-pay automation program.

American Electric Power