Transcript Slide 1

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Everything you ever wanted to know
about e-Invoicing but were afraid to ask.
Northern Lights IAPP February 15, 2007
Some Statistics
• Paper is stubbornly entrenched
• Critical information is not collected, data is poorly
organized, and systems are not well integrated
Domestic
17%
International
14%
83%
86%
Electronic
Paper
Source: Aberdeen 2006 A/P Benchmarking Survey
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Some more
Time to
Process an
Invoice
Cost to Process
an Invoice
Laggards
Industry Avg
Best in Class
30 to 60 days
10 to 30 days
7 days or less
$34 +
$3 + to $34
$3 or less
Source: Aberdeen 2006 A/P Benchmarking Survey
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Goals for A/P Managers
Maximize liquidity/cash
flow
50%
Improve visibility
into spending
37%
Lower costs through
automation & headcount
reduction
37%
Improve invoice auditing
31%
Integration of purchasing,
payables, & treasury
30%
Source: Aberdeen 2006 A/P Benchmarking Survey
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Volume of invoices
What’s Your Problem?
EDI
“strategic
suppliers”
Paper
“everything in
between”
P-Card
(“nuisance
spend”)
High Volume Suppliers
Low Volume Suppliers
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So Why Do We Still Have So
Many Paper Invoices?
 Cost and time required to change (both buyers & suppliers)
Volume of invoices
 No industry standards: Buyers & Suppliers use different
accounting systems
 Regulatory compliance differs from country to country
Computers which were supposed to eliminate paper just make
it easier to print invoices!!
volume of invoices by supplier
Distribution of suppliers
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Historical Attempts to Solve the
Problem
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•
Scanning (for data entry from image)
Outsourcing
OCR
What do all these have in common?
They don’t eliminate the paper!
– Why spend all that money to take something that
STARTED as data, convert it to paper, and then
convert it BACK to data?
– An invoice starts life as data!
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So, What is e-Invoicing?
• Invoice arrives from a supplier in electronic
format which can be uploaded directly into
ERP, processing systems and/or workflowsrather than on paper
• No “touch-points”: No mail room prep,
delivery to AP, AP data entry, scanning,
indexing etc.
– Biggest bottleneck in processing is time between
invoice receipt and when it is entered in system
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What e-Invoicing is NOT
• Email delivery of a scanned image
– Then printing it out so it can be keyed in. Hello?
• Having paper invoices sent to an outsourcer
for keying
• More efficient “handling” of paper invoices
– Scanning
– OCR
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Why is e-Invoicing “hot”?
 Continual pressure to reduce operating costs:
 Investors & management in the private sector
 Taxpayers & politicians in the public sector
E-Invoicing greatly
 Complex compliance requirements:
reduces or eliminates the
 Taxing authorities in EU
risk associated
with loss,
 Transparency,
visibility & accountability
in the US
(Sarbanes-Oxley)
certification
of internal
delay –and
human
errorcontrols
 Paper
invoice processing undermines both drivers:
 People/Cost Intensive
 Error Prone
 Slow
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How it works
Accounts Receivable E-Invoice service provider Accounts Payable
Transmits electronic
invoices directly from
their billing system
Receives invoices from
seller
 Receives electronic
invoices directly into
their financial system
Validates invoice fields
Uses the format of their
choice.
Validates tax compliance
Or uses an online web
form to enter and
transmit invoices
Stores electronic images in
a secure online data
warehouse
 In the format of their
choice
 Receives a digital
image of each invoice,
along with line level
detail
Transmits invoices to buyer
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The Challenge Facing Buyers
Suppliers have different ERP systems which
generate invoice outputs in different formats
Since Buyers can’t receive all these formats,
they specify one — However, typically only a
small percentage of suppliers can support it
Supplier
Supplier
Supplier
Supplier
Supplier
Buyer
Supplier
Supplier
Supplier
Supplier
Supplier
Buyer
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The e-Invoicing Solution
Supplier
Suppliers export invoice data from their existing
systems in the format of their choice, or enter
invoices on a web-form.
Supplier
Buyer
Supplier
Supplier
Electronically
translate the
data into the
format of the
buyer’s choice.
Buyers connect
once to receive ALL
invoices from ALL
suppliers
Supplier
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It’s not that difficult to start
•
•
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•
•
No new Hardware (no annual maintenance)
No new Software (no annual maintenance)
Limited IT Involvement
No Professional Services
Works seamlessly with ANY accounting
system (on either end)
• Supplier contact, enrollment in the program
and all technical details are handled by
someone else!
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The Immediate Benefits
Supplier
Electronic
Reduced Cost
Improved Cycle Time
Increased Financial Control
Purchasing Compliance/Visibility
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How E-Invoicing “E-nables”
• Same day receipt of invoices
• 100% of data, 100% accurate
• Reduced exceptions
– Validation before delivery
• Virtual Centralized Receipt
• Immediate visibility into current liabilities
• Full control over when to pay
– This has perhaps the biggest implication in terms of
dollars – let’s see how…
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Three Ways to Save Your Company
TONS of $$$
• Dynamic Discounting
• Paying within terms
• Float stretch management
• I guarantee your CFO, Controller and/or
Treasurer will be all ears!
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Dynamic Discounting Concept
• Vendors will accept a discount, sometimes
substantial, to get their money now
– Cash flow reasons, primarily
• Vendors see a list of invoices in a vendor
portal which are ready for payment, then
click “Pay me now”
• Available discounts can be throttled up or
down depending on your cash
– So popular that a “run” on the bank is possible!
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A graph!
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Dynamic Discounting Example
• $500 million in spend
• 60% PO, 40% non-P.O.
– 50% auto match on PO
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$500mil x 60% x 50% = $150mil
$500 mil x 40% = $200mil
$350mil available x 2% = $7,000,000
$7,000,000 x 5% avg = $350,000
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Paying within Negotiated Terms
• How many of you capture 100% of the
negotiated discounts across your spend?
• Have you ever calculated what that is?
• $500 mil in spend, lets say 20% of that is
2/10 net 30 = $2,000,000
– You do the math
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Float Stretch Management
• Vendor base with no discount terms
• Net 30, but how often to do pay sooner?
– 27 days, 20 days, 15 days?
• A “Charming” vendor, with a friend in AP?
• Pushy inquiry calls?
• Pay on exactly the 30th day
• “Either discount or we will pay to terms”
– “ethical” stretch
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This all sounds great Kevin, BUT…
• It’s worthless unless the suppliers participate!
• What’s in it for them?
– No more printing, stuffing, mailing, postage
– No more delays
– No more “Did you get my invoice?”
• If it requires a lot of effort on their part, they are
much less likely to participate
– No hardware or software installation
– Does not change their normal routine
• If done correctly, participation rates of 75%-85% of
invoice volume are very achievable
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Keys for Supplier Participation
• Strong and Clear Message, with a
consequence
• Proactive Follow-Up With Suppliers
• An Effective Enrollment/Enablement Process
• Regular Reporting & Visibility into The
Process
• Managing Your Partner Carefully
• Arranging Performance Guarantees
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Keys for Successful Implementation
• Executive Sponsorship
• Well defined vision for AP; how e-Invoicing
fits within/supports that vision
• Clearly Defined Goals & Objectives
• Cross Functional Support
• Strong Project Champion
• Rigorous Project Management
• Communication, Communication,
Communication
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You’re in Good Company
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Thank you
Kevin Burney
Director of Sales, Central US
Tel: 415.772.8095
Cell: 920.342.0812
Fax: 415.956.7811
Email: [email protected]
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