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The supplier of uniforms and corporate apparel says it’s saving 3% of gross billings—and getting paid faster—by processing customer invoices through the Ariba Network instead of through payment cards or EDI.
Arizona Uniform & Apparel has supplied uniforms to hospitals, government agencies, schools and various types of businesses for more than 20 years, but recently one of its major customers presented it with an unexpected—and costly—demand. The customer wanted Arizona Uniform to begin accepting all of its invoices electronically through payment cards and electronic data interchange—a move that would start out costing Arizona Uniform about $15,000 a year in card and EDI fees.
In addition, Arizona Uniform would still be required to track its customer’s payments manually, checking receipts of payment card transactions and updating them in its accounting software.
But instead of just going ahead with the customer’s initial request and taking on the extra costs, Arizona Uniform searched for an alternative way to process the customer’s invoices that would let the customer benefit from the electronic processing of purchase orders and invoices while also saving Arizona some of the related costs and time.
After considering several options, the supplier of uniforms and corporate apparel chose to use the Ariba Network to connect through the Internet-based business exchange and collaborate online over invoicing and payment records. Ariba is a unit of SAP AG, the provider of business operating software for such purposes as financial accounting and inventory management.
“Ariba was the most cost-effective way to connect with our customer, saving at least 3% on gross billings, which is far more than we could have expected from any of the other solutions we were considering,” says Ann Cantu, president and Arizona Uniform & Apparel.
Arizona Uniform also joined Ariba’s Supplier Management Program, which includes the Internet-based Ariba Integration Connector. That enables the company to send its Ariba Network-connected customer electronic invoices directly from Arizona Uniform’s QuickBooks financial management software to the Ariba Network, where the network validates the invoices and forwards them electronically to the customer’s accounts payable system. Once the customer receives the invoices, Arizona Uniform receives an electronic confirmation of receipt and can then check the Ariba Network for the customer’s timing of payments. The Ariba Integration Connector is powered by cloud or Internet-based technology from Dell Boomi, a unit of Dell Software Group, part of Dell Inc.
The Ariba Network allows corporate buyers and suppliers to find listings of trading partners and begin making business transactions without paying any initial fees. Once two companies reach a minimum of five transaction documents and $50,000 in transaction value, Ariba begins to charge them fees, an Ariba spokeswoman says. The typical annual Ariba Network bill comes to about $700, she adds.
Companies that opt to join the Supplier Management Program can choose among five levels of service based on the degree to which companies collaborate with product catalogs, purchase orders and invoices. The program’s subscription fees are based on the number of business documents and the financial value of transaction volume, plus the level of automated reports and other network services. Annual costs to supplies range from zero to $7,495, the spokeswoman says.
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