Transcript How Banks Enable STP in Business Processes

ABANKA
Cross-border eInvoicing in
eRegion – Banks and Technology
Providers Perspective
Friday, 22nd October
Franc Bračun, PhD
Merkur Day 2004
Speakers
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Chair:
Dr. Franc Bračun, Executive Director
Branch Network, Abanka Vipa, Ljubljana, Slovenia
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Speakers:
Mag. Martin Mihelčič, Director of Card Business & eBanking
SKB banka d.d. - Société Générale Group
Mr. Kari Korpela, eBusiness Project Manager
Technology Centre Kareltek Inc., Lappeenranta, Finland
Ms. Andja Komšo, Adviser to the Government
Head, Department for Organization and Development of Information Technology
Tax Administration, Ministry of Finance, Republic of Slovenia
Dr. Tomaž Domajnko, Director, IT Research & Development
SRC.SI, Systems Integration, Ljubljana, Slovenia
Mr. Tomaž Kavčič, Executive Director
eBusiness Unit, S&T Hermes Plus, Ljubljana, Slovenia
Mr. Janez Uplaznik, Director
Mikropis Holding, Žalec, Slovenia
Background
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There are many aspects to electronic commerce and trading. Being able to
present and pay invoices electronically is an obvious element of this, but until
recently one of which few organizations have taken full advantage.
In most organizations today, invoices are:
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raised manually
printed on paper and
posted to the customer
When the payment period has expired, the supplier will contact the customer to
ask why no payment has been received and will here one of the three answers:
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There will be a dispute over the order, necessitating a process of checking,
adjustment and final agreement
the invoice will be somewhere between the desk of the person who placed the order
and the accounts department
The payment will be about to be settled via the payment system
This process is time-consuming and cost-inefficient.
Evidence of the Need for Change
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The bank with 200 people to repair the 30% of payments that they have set up
incorrectly;
The insurance company with 90 people to answer the 1 million phone queries it
receives annually from suppliers chasing payment;
the supermarket group which cannot reconcile up to 5% of its spend on goods
for sale with the invoices it receives;
the procurement organization that rejects 3,000 invoices per month due to
incorrect charging information;
the same organization that creates over 1,000 new supplier records each year
on its accounting systems;
the drugs company that churns annually 40% of its clinical trial suppliers due to
disputes over payments.
A list of such horrors could be drawn up from organizations in every industry.
Key Business Needs
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Purchasing control, efficiency and contract
compliance are key to businesses.
Critical elements to achieve these are
electronic payments and invoicing solutions.
These need to be practical, and integrated
into the end-to-end buying process for use by
all within it, not just the accountants.
The First Key Point
Buyer
Tax
Procurement
Treasury
Supply Chain Operations
Finance and Accounting Operations
Select
Order
Receive
Fit
Pay
Reconcile
Reclaim VAT
Offer
Process Order
Dispatch
Invoice
Reconcile
Reconcile
Pay VAT
Supply Chain Operations
Finance and Accounting Operations
Treasury
Tax
Seller
Focus on optimizing the end-to-end supply chain business
processes that require invoicing and payments, not on
isolated solutions.
A clear channel strategy and policy for
using channels are required
Invoice Channels
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Card Payments
EDI
Electronic Invoices
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Electronic file transfer
Electronic invoice
presentment
E - mail
Magnetic media/CD-ROM
XML
Paper Invoices
Self Billing
T&E Card
People, Processes & IT
Systems
Organization
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Procurement
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Supply Chain Operations
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Finance and Accounting
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Treasury
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Tax
Payment Channels
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Bank Branch
Charge Card
Cheque
EDI
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Electronic
Payment Initiation
Electronic Funds
Transfer
Internet Banking
Telephone
PC Banking
Purchase Card
Establish a clear ‘channel’ strategy – one-size fit all solutions are impractical in
large and in complex supply chains. Different solutions are needed for different
areas of spend and for different supply chains.
Electronic Invoice Presentment
and Payment (EIPP)
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With an EIPP system money transactions
can be handled end-to-end electronically
over the Internet, from rising the invoice to
collecting the money.
Areas to Address
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Cost savings through process and administrative efficiencies
(e.g. studies in Europe have identified process cost savings of
60% - 77% when purchasing cards have been introduced in
specific areas), and through improved deals based on better
information and service with
Improved customer and supplier relationships through reduced
exception processing and queries, and better information
Reduced working capital through improved collections and
better use of discounts.
Be innovative, but take one step at a time - focus on areas of
tangible benefits such as the manually intensive processes
that generate non-added value activities.
Barriers to moving forward
Barriers that need to be overcome before this critical mass occurs
include:
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A lack of widely accepted standards for interoperable solutions
The need for adoption of widespread and low cost supplier/customer/bank
connectivity
Migration away from traditional, high-cost EDI networks to innovative, lowcost internet-based
Upgrade of banking infrastructures to allow processing of the new payment
schemes needed to support electronic business processes
The need for a growing number of case studies of successful electronic
payment and invoicing implementations
Changes to executive perception (payment and invoicing processes are
boring utility processes that add little value and are generally not broken –
so why change?) and greater executive appetite to innovate.
Functions and Features
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Features and functions to consider are:
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Exception processing and dispute management features
Payment schemes (e.g. bulk, guaranteed, conditional)
Clearing system integration – direct debits and credits
XML messaging (to accommodate multiple, organisation-specific
invoice formats)
ERP purchase-to-pay processes for large repetitive orders from
key suppliers (often purchase orders against a contract)
Public Key Infrastructure security for electronic transactions
Hosted vs. in house operated applications
Email notification of receipt/sending.