Taulia has positioned themselves as the clever penny-pinching gnomes of the supply chain finance world. By developing a SAP-certified add-on, they have enabled themselves to make a significant amount of money based on a lot of pennies. (Think: Office Space, but legal)
Although Taulia doesn’t mention how they make money on their website or in any of their literature, it is obvious that they are getting a very small cut of every transaction they facilitate. Their business model is clever: Enable large corporations to capitalize on a sliding scale for supplier discounts instead of the normal suppler discount schedules (which give a 2% discount if the buyer pays within 10 days of invoice, but which offer no additional discount prior to that 10-day mark, and offer no discount at all after that 10-day mark). Think about it: Wouldn’t a 1.5% discount at 20 days be better (for both the buyer and supplier) than No discount at 20 days? The Supplier gets cash faster. (Cash is king!) The Buyer maintains a pre-set level of liquidity while capitalizing on a discount.
So Taulia offers this software program and a way to get discounts over a longer period of time. If you’re Coca-Cola Bottling (an actual client of Taulia), and you spend a few billion dollars a year on supplies, wouldn’t an extra 1% of discount (or even a fraction of a percent discount) be worth giving Taulia a cut? Trust me. It is. And when Taulia adds up all those little cuts (probably 0.1-0.2%) over a few billion dollars in transactions, they’re gonna be wearing golden diapers, baby! (Think about it…Saturday Night Live…Blue Oyster Cult…wait for it…yep, now you got it.)
And the buyer is thrilled that they are saving millions of dollars a year. One client claimed $140k in savings in a month! Tough to argue with those numbers.
If Taulia’s SAP add-on can be uploaded remotely, then Taulia is saving a considerable amount of money on travel, but I doubt they are doing that. I would expect Taulia to install the program and train the Finance and Accounts Payable departments in-person. This is their distribution model. I would expect as SAP incurs updates, Taulia would do the same.
Taulia is offering a great service, and the price is “hidden” in the savings that the Buyers are realizing based on that service. Taulia may run into problems in out-years as their clients push for greater savings from this service, and Taulia may feel pressured to decrease their cut from each transaction. This will drive the sales force to expand their client base continuously.
UW Marketing 555 