Paying suppliers has long been viewed as a mundane back-office function. High-profile treasury activities such as M&A deals or issuing bonds often eclipse the accounts payable (AP) department, which typically focuses on two goals:
1. Pay only for what was ordered and received
2. Honour agreed payment terms, taking advantage of supplier credit.
Traditionally, AP has aimed to achieve this with minimal disruption and cost. Barring irate supplier calls or paperwork mismatches, it was a straightforward process. The landscape shifted in the early 2000s, however, with the introduction of supply chain financing (SCF).
At first, SCF was a novel concept. As a treasurer, I remember evaluating it from an accounting perspective, developing tests to keep discounted invoices on the balance sheet. I even suggested our business fund early settlements using surplus cash, perhaps one of the first ‘dynamic discounting’ pitches. The idea was ahead of its time and was ultimately rejected because of its complexity.
Over the years, there was misuse of SCF. Some companies pushed payment terms to 180 days or more, coercing smaller suppliers into accepting abusive terms. These practices were not just unethical; they threatened the accounting integrity of SCF. Thankfully, abuses are diminishing as a result of increased market maturity, regulatory disclosure in annual reports and prompt payment codes of conduct.
Properly implemented, SCF supports suppliers and yields working capital or pricing advantages to buyers. Yet traditional SCF still comes with barriers: onboarding, system integration and exclusion of smaller suppliers who arguably need it most. That’s where next-generation platforms (NGPs) come in.
Modern innovations are turning the AP function into a profit centre, beginning with a critical change in perspective, shifting the workload from the buyer to the supplier.
We’re used to self-service in our personal lives; think of booking travel or banking online. Supplier-led AP systems apply this approach to B2B relationships. Instead of the buyer handling all data processing, the supplier enters its invoice against pre-loaded purchase orders (POs), shipping notices and regulatory data. Figure one illustrates the change in approach, putting the NGP platform between the supplier and buyer.
NGPs such as those offered by Prima Trade enable this transformation. These platforms do more than traditional SCF: they automate invoice validation, approval and compliance, allowing suppliers to request immediate payment through third-party funders or buyer-facilitated dynamic discounting.
The results are compelling. Suppliers receive funds faster, reducing their financing and credit costs. Buyers benefit from documented procurement savings and lower internal processing costs. The change in workflow allows these savings to be captured in the income statement.
Traditional AP models are cumbersome. The buyer bears the burden of processing: scanning, matching, approval, tax compliance and reconciliation. Invoice approvals can take 10 days domestically or more than 20 for cross-border transactions. During that time, suppliers absorb financing costs.
In a supplier-led model, the seller is motivated to input accurate data promptly to get paid sooner. This includes invoice details, shipping notices and matching against POs. Once verified by the NGP, the invoice is approved for payment and can be funded instantly.
The benefits extend beyond speed. NGPs can enable the collection of ESG and regulatory data, for example by incorporating this requirement into the invoice approval process.
This shift transforms AP from a transactional function into a strategic centre for control and data. Three-way matching remains essential, but most of it is now handled upstream. The buyer focuses on final reconciliation and date processing, potentially reducing the resource required within the AP team.
By accelerating the invoice life-cycle, NGPs deliver measurable procurement gains. These savings come from unlocking the delays inherent in the traditional process. With fast approvals and early payment discounts negotiated upfront, companies can reduce the cost of goods sold (COGS) without altering contractual terms.
Suppliers also benefit from a safer, more predictable payment environment. Even for exporters, the transaction is effectively risk-free, improving their working capital and lowering their cost of financing.
The buyer’s existing SCF programme remains unchanged in terms of accounting treatment and external funding, but the efficiency boost makes the system more accessible to a broader supplier base.
NGPs also support a second innovation: advanced discount optimisation. By analysing anonymised data across supplier networks, platforms can identify the most effective times and terms for offering early payments. This helps determine how much a discount is truly worth to a supplier.
As C2FO’s Matt McQuillan explains: “Any company can save by paying early, but the real value lies in knowing which supplier needs cash and when. That insight drives real savings.”
With this intelligence, buyers can identify arbitrage opportunities, cases where the discount on receivables is lower than on payables. By leveraging dynamic discounting strategically, the buyer can earn a risk-free margin on the spread.
NGPs can also facilitate ESG goals. Scoring systems such as EcoVadis allow buyers to factor sustainability metrics into supplier assessments. Discounts can be tailored based on ESG performance, incentivising positive behaviour throughout the supply chain.
Moreover, as suppliers enter data directly, ESG reporting becomes a seamless part of the compliance process. This reduces the administrative load on buyers and improves accuracy. With increased focus on Scope 3 emissions and sustainable procurement, this capability is especially valuable. So, how does the treasurer build the business case?
NGPs offer a rare trifecta of benefits: income statement savings, better data and resource efficiency on top of the existing working capital benefits. These tangible results should galvanise internal support across departments such as procurement, ESG, CIO and HR.
AP sees its manual workload reduced. Procurement gets to book a profit against COGs. ESG and information officers get cleaner, more actionable data. Even HR benefits from upskilling staff from low-value tasks to more strategic roles.
Concerns about control are understandable. The supplier-led model shifts three-way matching upstream, potentially finalising payments before all internal checks are complete. However, payment limits and post-payment reconciliation mitigate risk. In practice, the risk is minimal compared with the potential savings of 1% to 5% of COGS.
Accounts payable is no longer a back-office burden. New technologies and supplier-led models are transforming it into a genuine profit centre. By shifting the workload to suppliers and leveraging NGPs, companies unlock faster payments, better data and
real savings.
NGPs also enable smarter early payment strategies and ESG integration. The result is a more transparent, efficient and commercially advantageous payables ecosystem. In a world of pricing volatility and regulatory scrutiny, these innovations give businesses the tools to turn AP from a cost centre into a competitive advantage
Ben Walters FCT (Adv Dip) is the former deputy treasurer of Compass Group PLC, with extensive experience across the corporate treasury landscape, and is currently seeking new opportunities at the group treasurer level, where he can continue to drive strategic value and financial leadership
This article first appeared in The Treasurer Issue 3, 2025
