How Much Can You Save Now?

A Business Case for Consolidating Operating Units and Inventory Organizations

If you are able to determine how much you spend with each of your suppliers, you may be able to renegotiate your discounts. Many suppliers will provide volume discounts if you commit to certain spending levels. By looking at your total spend across all operating units, you may be able to reach the thresholds required for greater discounts.

By increasing the number of days a company holds on to cash, additional interest will accrue, whether using a daily sweep checking account or another instrument for cash management. The chart below analyzes the benefits of extending the payment terms with suppliers and calculating the value of having the cash on hand for an additional “float” period.

Use the calculator below to find out how much capital your company can save by reducing its number of suppliers to take advantage of additional discounts on materials as well as additional float days for accounts payable. When entering values, do not use commas (,) or the percent sign (%). For example, for an additional supplier discount of 2%, enter .02. The <TAB> and <SHIFT>+<TAB> keys can be used to navigate between fields.

For more information on this topic, please see Leveraging Purchasing in a Multi-Org Environment.