Offering early payment discounts is a common practice among suppliers and vendors to incentivize their customers to pay their invoices on time, but PYMNTS’ research finds that many software-as-a-service (SaaS) firms experience errors and delays when paying their suppliers, even though they are as liable as players in any other industry to be offered early payment discounts. 
A closer look into how these firms currently manage non-payroll spending — and the payment of supplier invoices in particular — reveals that the firms too often rely on time-consuming and inefficient manual processes.
A key advantage of using such a spend management system is automation, which reduces data errors and enables SaaS firms to pay suppliers in a timelier fashion — thus enabling them to receive early payment discounts. Nearly half of all SaaS firms surveyed report that they have received a discount for early payment from suppliers in the last 12 months, but two-thirds of SaaS firms surveyed that currently use a non-payroll spend management system report receiving a discount for early payment. The implication is clear: Reducing both labor costs and non-payroll spending while taking advantage of early payment discounts empowers SaaS firms to improve their financial performance and drive growth.
“Improving Financial Performance: Taking Advantage Of Early Payment Discounts,” a PYMNTS and Airbase collaboration, examines discounts for early payments, exploring their nature and usage, the types of companies that take advantage of them and their importance for those firms. 
We surveyed 225 executives with deep knowledge and leadership responsibilities in accounts payable (AP) departments at SaaS companies with 100 to 1,500 employees between May 18 and June 6 to explore how an automated system can streamline non-payroll spend management and improve financial performance.
Key findings from the study include:
• Close to half of all firms surveyed experience data entry errors when managing non-payroll spending, with an average of 10% of payments to suppliers requiring adjustments due to processing errors. These frictions most affected small firms in the last year. Errors and inaccuracies are a significant problem in the space. We found that 47% of firms currently face data entry errors when managing non-payroll spending, and 20% of executives surveyed reported that the errors are their biggest challenge. On average, 1 in 10 payments to suppliers require adjusting for SaaS firms. For 37% of firms, these payments represent more than 10% of total payments made to suppliers in the last 12 months.
• Using a spend management system helps SaaS firms pay suppliers in a timely manner and receive early payment discounts. While 47% of all SaaS firms received a discount for early payment from suppliers in the last 12 months, two-thirds of those firms using a non-payroll spend management system received a discount. Discounts for early payment are fairly common — and these discounts can be large. Close to half of all firms have been offered some type of discount, with 26% receiving discounts for up to 10% of their payment obligations in the last 12 months, and another 21% received discounts for more than 10%. Larger firms are more likely to be offered a discount for early payment than smaller firms, at 56% and 39%, respectively.
• Despite 47% of all SaaS firms having received a discount for early payment, few firms take this discount all the time. Only 24% of executives at SaaS firms that have been offered early payment discounts said they took advantage of them all the time, while 22% said they take these discounts more than 75% of the time, but not each time. Just 4.8% of companies said they have never taken advantage of them. Larger firms take these discounts more often than smaller firms, while firms that do not have a spend management system are more likely to lose discount opportunities.
To learn more about how SaaS solution providers use a non-payroll spend management system to receive early payment discounts, download the report.