Finance

The unexpected origins of a modern finance tool

Published

2 years ago

June 6, 2024

The unexpected origins of a modern finance tool

In the early 1600s, the officials running Durham Cathedral, in England, had serious financial problems. Soaring prices had raised expenses. Most cathedral income came from renting land to tenant farmers, who had long leases so officials could not easily raise the rent. Instead, church leaders started charging periodic fees, but these often made tenants furious. And the 1600s, a time of religious schism, was not the moment to alienate church members.

But in 1626, Durham officials found a formula for fees that tenants would accept. If tenant farmers paid a fee equal to one year’s net value of the land, it earned them a seven-year lease. A fee equal to 7.75 years of net value earned a 21-year lease.

This was a form of discounting, the now-common technique for evaluating the present and future value of money by assuming a certain rate of return on that money. The Durham officials likely got their numbers from new books of discounting tables. Volumes like this had never existed before, but suddenly local church officials were applying the technique up and down England.

As financial innovation stories go, this one is unusual. Normally, avant-garde financial tools might come from, well, the financial avant-garde — bankers, merchants, and investors hunting for short-term profits, not clergymen.

“Most people have assumed these very sophisticated calculations would have been implemented by hard-nosed capitalists, because really powerful calculations would allow you to get an economic edge and increase profits,” says MIT historian William Deringer, an expert in the deployment of quantitative reasoning in public life. “But that was not the primary or only driver in this situation.”

Deringer has published a new research article about this episode, “Mr. Aecroid’s Tables: Economic Calculations and Social Customs in the Early Modern Countryside,” appearing in the current issue of the Journal of Modern History. In it, he uses archival research to explore how the English clergy started using discounting, and where. And one other question: Why?

Enter inflation

Today, discounting is a pervasive tool. A dollar in the present is worth more than a dollar a decade from now, since one can earn money investing it in the meantime. This concept heavily informs investment markets, corporate finance, and even the NFL draft (where trading this year’s picks yields a greater haul of future picks). As the historian William N. Goetzmann has written, the related idea of net present value “is the most important tool in modern finance.” But while discounting was known as far back as the mathematician Leonardo of Pisa (often called Fibonacci) in the 1200s, why were English clergy some of its most enthusiastic early adopters?

The answer involves a global change in the 1500s: the “price revolution,” in which things began costing more, after a long period when prices had been constant. That is, inflation hit the world.

“People up to that point lived with the expectation that prices would stay the same,” Deringer says. “The idea that prices changed in a systematic way was shocking.”

For Durham Cathedral, inflation meant the organization had to pay more for goods while three-quarters of its revenues came from tenant rents, which were hard to alter. Many leases were complex, and some were locked in for a tenant’s lifetime. The Durham leaders did levy intermittent fees on tenants, but that led to angry responses and court cases.

Meanwhile, tenants had additional leverage against the Church of England: religious competition following the Reformation. England’s political and religious schisms would lead it to a midcentury civil war. Maybe some private landholders could drastically increase fees, but the church did not want to lose followers that way.

“Some individual landowners could be ruthlessly economic, but the church couldn’t, because it’s in the midst of incredible political and religious turmoil after the Reformation,” Deringer says. “The Church of England is in this precarious position. They’re walking a line between Catholics who don’t think there should have been a Reformation, and Puritans who don’t think there should be bishops. If they’re perceived to be hurting their flock, it would have real consequences. The church is trying to make the finances work but in a way that’s just barely tolerable to the tenants.”

Enter the books of discounting tables, which allowed local church leaders to finesse the finances. Essentially, discounting more carefully calibrated the upfront fees tenants would periodically pay. Church leaders could simply plug in the numbers as compromise solutions.

In this period, England’s first prominent discounting book with tables was published in 1613; its most enduring, Ambrose Acroyd’s “Table of Leasses and Interest,” dated to 1628-29. Acroyd was the bursar at Trinity College at Cambridge University, which as a landholder (and church-affiliated institution) faced the same issues concerning inflation and rent. Durham Cathedral began using off-the-shelf discounting formulas in 1626, resolving decades of localized disagreement as well.

Performing fairness

The discounting tables from books did not only work because the price was right. Once circulating clergy had popularized the notion throughout England, local leaders could justify using the books because others were doing it. The clergy were “performing fairness,” as Deringer puts it.

“Strict calculative rules assured tenants and courts that fines were reasonable, limiting landlords’ ability to maximize revenues,” Deringer writes in the new article.

To be sure, local church leaders in England were using discounting for their own economic self-interest. It just wasn’t the largest short-term economic self-interest possible. And it was a sound strategy.

“In Durham they would fight with tenants every 20 years [in the 1500s] and come to a new deal, but eventually that evolves into these sophisticated mechanisms, the discounting tables,” Deringer adds. “And you get standardization. By about 1700, it seems like these procedures are used everywhere.”

Thus, as Deringer writes, “mathematical tables for setting fines were not so much instruments of a capitalist transformation as the linchpin holding together what remained of an older system of customary obligations stretched nearly to breaking by macroeconomic forces.”

Once discounting was widely introduced, it never went away. Deringer’s Journal of Modern History article is part of a larger book project he is currently pursuing, about discounting in many facets of modern life.

Deringer was able to piece together the history of discounting in 17th-century England thanks in part to archival clues. For instance, Durham University owns a 1686 discounting book self-described as an update to Acroyd’s work; that copy was owned by a Durham Cathedral administrator in the 1700s. Of the 11 existing copies of Acroyd’s work, two are at Canterbury Cathedral and Lincoln Cathedral.

Hints like that helped Deringer recognize that church leaders were very interested in discounting; his further research helped him see that this chapter in the history of discounting is not merely about finance; it also opens a new window into the turbulent 1600s.

“I never expected to be researching church finances, I didn’t expect it to have anything to do with the countryside, landlord-tenant relationships, and tenant law,” Deringer says. “I was seeing this as an interesting example of a story about bottom-line economic calculation, and it wound up being more about this effort to use calculation to resolve social tensions.”

Related Topics:Ambrose Acroyd history of discounting Mr. Aecroid’s Tables William Deringer

Click to comment

Finance

How Applied Materials Is Driving Transformation of the Finance Function with SAP Taulia

Published

15 hours ago

June 4, 2026

Press Room

How Applied Materials Is Driving Transformation of the Finance Function with SAP Taulia

Within the global manufacturing industry, maintaining a competitive edge requires a delicate balance between driving internal efficiency and fostering strong external relationships. For Applied Materials, a leader in materials engineering solutions for the semiconductor industry, this challenge became the foundation for a strategic finance transformation program, with an SAP Taulia solution emerging as a key enabler.

The journey began in early 2019 with the launch of Agile Finance, an end-to-end transformation initiative designed to support the company’s aggressive growth trajectory, which included a goal to double in size. The initiative was built around three strategic pillars: enhancing the efficiency and effectiveness of the finance organization, promoting career fulfillment, and establishing a robust digital operating model. The impact was significant, with the finance function achieving approximately 35% productivity gains in its labor force.

The third pillar—the move to a digital operating model—is where the partnership with SAP Taulia began.

“The SAP Taulia Dynamic Discounting solution was introduced not merely as a cost-cutting measure, but as a strategic tool to transform and digitize the interaction with Applied’s extensive, global supplier base,” Junaid Ahmed, corporate VP, Finance at Applied Materials, says. “We understood that to reap the benefits of digitization, we had to ensure the suppliers were on board. It needed to be a win-win outcome.”

Unprecedented flexibility for suppliers

The program empowers suppliers—thousands of them worldwide—to self-select which approved invoices they wish to discount for early payment. This is not a continuous, all-or-nothing commitment but rather a decision made on an invoice-by-invoice basis. This flexibility allows suppliers to manage their working capital needs with greater precision, taking advantage of early payment during their own critical periods, such as quarter-end or year-end, to help meet their own financial targets.

The system also drastically improves transactional efficiency. Suppliers no longer have to call Applied to track invoice status, approval, or payment date. All this information is available 24/7 in the SAP Taulia solution, reducing resource allocation on both sides and ensuring both reap the benefits of moving to an integrated, digital system.

Strategic benefits for Applied Materials

For Applied, the program is a testament to its focus on balancing efficiency with strong supplier relationships. The philosophy is a “win-win” built on a crucial spread: Applied Materials, as a Fortune 500 company with strong cash flow, has a significantly lower cost of capital than many of its suppliers. By funding the discounts, Applied captures a return—the discount income—while offering its suppliers funding at a rate close to their cost of capital, but with greater convenience.

This relationship-focused approach is critical. Applied’s supplier account managers actively support the program because they recognize its mutual benefit, not viewing it as a finance mandate to push costs onto the supply base.

Furthermore, the “dynamic” nature of the discount rates is a powerful risk mitigation tool. Unlike fixed contractual discounts, the rates can be adjusted in response to global economic changes, such as shifts in interest rates. When interest rates rose after the pandemic, Applied was able to adjust the discount rates accordingly with minimal pushback, as the core proposition remains the valuable spread between the parties’ cost of capital.

The SAP Taulia Dynamic Discounting solution has been rolled out globally, giving all suppliers the opportunity to use it. This has been critical over the last 12 months as many businesses around the globe have been subject to new and often unexpected tariff costs impacting their margin and their liquidity.

“The flexibility of the solution means suppliers can access funds when they need them, which helps them navigate some of the economic uncertainty that many businesses are facing,” Dirk Holoubek, managing director, Finance Shared Services, explains. “2025 saw a 23% increase in usage of the discounts, reflecting the pressures that suppliers are feeling right now on their cash flow.”

The solution’s capability to drive sophisticated analytics is also a major strategic asset. It helps provide insights into the different costs of capital between Applied and its supplier base. This data allows for targeted outreach and communication, ensuring that the offer of capital support is proactively extended to the suppliers that need it most.

The strategic value of the solution is further cemented by its ownership. The acquisition of Taulia by SAP brings several advantages.

“Trust is really important to both us and our suppliers,” Ahmed says. “For our suppliers to adopt a new solution, they need to know its technology they can rely on in the long term. Being part of SAP creates that assurance in the long-term future of the program.”

Looking forward, Applied Materials is already focused on the next stage of the transformation project: Agile Finance 3.0, which is focused on enabling the organization to become AI-first. The company is deploying a global, organization-wide AI assistant to drive personal productivity, but the strategic application of AI in the supplier management space is even more profound.

AI is expected to transform decision-making enablement by analyzing critical information and communicating effective options. In the future, AI will be able to proactively assess the specific needs and attributes of the supplier base, enabling Applied to address issues more quickly and resolve them earlier. The benefits are already tangible in e-invoicing: AI has made the solution more flexible and “human-like,” capable of reading minor changes in invoice format that would have previously caused electronic errors. This reduced rigidity and increased flexibility are directly contributing to the overall efficiency of the digital operating model.

By leveraging the SAP Taulia Dynamic Discounting solution, Applied Materials has not only digitized a process but also strategically transformed its financial operations, creating a system that is agile, resilient, and focused on maintaining mutually beneficial relationships with its global supplier ecosystem.

Cedric Bru is CEO of SAP Taulia.

Finance

Houston budget amendment would give financial assistance to help those impacted by a trash fee

Published

1 day ago

June 3, 2026

Press Room

Houston budget amendment would give financial assistance to help those impacted by a trash fee

HOUSTON, Texas (KTRK) — Houston City Council could soon consider whether to offer financial assistance to help those who may struggle to afford a proposed trash fee.

This month, council will approve a budget. In it, Mayor John Whitmire doesn’t increase taxes.

However, he does want to charge a $5 monthly fee to cover trash services. A plan to help close the city’s nearly $200 million deficit that doesn’t add up to some.

Speaking in front of council on Wednesday, Super Neighborhood 64 president Lindsay Williams brought more than concerns, she had numbers surrounding the mayor’s proposed $5 monthly trash fee.

A plan his team says could climb to $25 a month by 2032. If it does, Williams told council that $300 annual cost would be just .15% of a $200,000 income.

For someone making $15,000, it’s two percent. “More than 13 times the burden for the same trash, same truck and same fee, but not the same pay,” Williams explained.

However, Controller Chris Hollins said the mayor’s not being truthful about the real cost.

“Houstonians are not stupid,” Hollins said. “We should not treat Houstonians like they’re stupid.”

Hollins said the cost may need to be $40 a month. Whitmire didn’t respond to Hollins during the meeting when he asked if he plans to increase the fee.

No matter the cost, some council members want to offer financial relief. Right now, there are no exceptions.

However, an amendment council will consider from Council Member Alejandra Salinas next week would change that.

“If they for whatever reason met the threshold and need an additional need because of the administrative fee, our amendment would allow them to apply for funds through the water fund,” Salinas said.

The trash fee wasn’t the only item from the mayor’s seven and a half billion dollar budget proposal that sparked debate. Hollins said a plan to divert money away from water utilities could drain a billion over the next five years from infrastructure money.

Whitmire disagrees saying there’s more than enough funds to handle the change, and continue with projects.

“We’ve all admitted the budget’s not perfect, but certainly it’s a first start that Houstonians understand and it’s a shame it’s being so politicized because it’s literally people’s lives and death,” Whitmire said.

Council will vote on amendments next week. It has to have a new budget in place by the end of the month.

Finance

How can I illustrate our financial position to a spouse who shows little interest?

Published

1 day ago

June 3, 2026

Press Room

How can I illustrate our financial position to a spouse who shows little interest?

Reader question: My spouse has little interest in our financial position. As we age, this concerns me. I try to share some basic information (income, spending, account balances, debt, and so on) each month but rarely get a response. I think graphs or charts might be of more interest to her than a bunch of numbers. What recommendations would you have for illustrating our financial position so that I am not the only person aware of how we are situated? Thanks!

Answer: Your situation is pretty common. Most couples I know develop a division of labor over time, where one person is in charge of financial matters and the other person is less involved. That’s definitely the case for my husband and me. He’s in charge of paying all the monthly bills and preparing our tax returns, but the financial planning and investment decisions are up to me. This type of arrangement might work well for a long time, but can become less sustainable with age, particularly if the “finance person” in the relationship dies or develops a major health issue.

Online tools and mind maps

Illustrating your financial situation with charts and graphs is a great idea that might help your spouse become a little more involved. Morningstar’s  Portfolio X-Ray  tool includes a variety of images that help illustrate your financial situation. Websites for most major brokerage firms also include some visual tools. Schwab, for example, offers a Portfolio Checkup and a bar graph illustrating your account’s monthly income from dividends and interest income. Vanguard has a Portfolio Watch tool and a variety of performance illustrations, tools, and calculators.

A  mind map, which we used with clients when I worked for a financial advisory firm, can be another way to picture your entire financial situation on one page. There are various  softwaretemplates  for drawing a mind map, or you can simply sketch it out with a large sheet of paper and a pencil. Start with your names at the center of the page. Then draw spokes connecting to various categories, such as names of other family members; investment accounts; real estate and other assets, insurance policies, estate plans, key goals and values, and contact information for accountants, estate planners, and other professionals. It can be helpful to go through the mind map together and make any updates needed at least once a year.

Other ways to communicate about money

A few other ideas—though not related to charts and graphs—might also be useful.

I like the idea of putting together a  net worth statement  that itemizes cash, taxable accounts, real estate, retirement accounts, and debt for each member of the couple as well as items owned jointly. It’s a good idea to update this document at least once a year and  discuss it as a couple. If you set up the document as a spreadsheet, you can include columns with additional information such as account numbers, what each account is used for, which accounts are subject to required minimum distributions, or tax issues like potential capital gains.

Many couples also put together a  binder  (sometimes humorously called a “Doomsday Book”) that contains information about where to find important paperwork, insurance policies, how bills are paid, what each account is for, steps the surviving spouse will need to take, final wishes, and any other critical information.

A well-qualified financial adviser can bridge the information gap

Finally, you could consider working with a good  financial adviser,  who can help involve your spouse in financial matters while you’re still living and step in to fully manage investments and personal finance decisions if you pass away before your spouse. Make sure the adviser holds the Certified Financial Planner designation and charges fees that are reasonable. Although a 1% fee is still the industry standard for accounts of $1 million or less, it’s possible to find advisers who charge significantly less, including a few who price their services based on hours worked instead of a percentage of assets under management.

_____

This article was provided to The Associated Press by Morningstar. For more personal finance content, go to https://www.morningstar.com/personal-finance.

Amy C. Arnott, CFA, is a portfolio strategist for Morningstar and co-host of The Long View podcast.