Transcript Presentation title - The Accounts Payable Network

Electronic Invoicing:
Are You Ready?
Are Your Vendors?
Session 9
About the Speaker
Penny Gillespie
Gillespie International, Inc.
Penny is a pioneer in electronic banking and bill payment. She founded
Gillespie International, Inc., in 2005 bringing a rich background in financial
product development and money movement, having previously focused on
multi-application smart cards, online banking, financial supply chain, and mobile
commerce. Prior to starting Gillespie International, Inc., Penny worked for five
years as a senior industry analyst at Forrester Research. Penny appeared on
ABC’s Business Now, has participated in numerous radio talk shows and been
featured in many publications.
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©2010 Financial Operations Networks LLC
Accounts Payable: Are you ready?
POLLING OPPORTUNITY
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Agenda
• Current trends
• The case for AP automation
• Barriers to AP automation
• Moving from paper to e-invoicing
• Lessons learned
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AP Automation is Essential
Companies that fail to migrate
Accounts Payable (AP) from
paper to electronic invoicing
(e-invoicing) and straight
through processing (STP)
cannot compete with those
that do.
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©2010 Financial Operations Networks LLC
It’s a Cash Culture
How Important is cash flow
optimization to your organization?
Has your organization increased its
focus on cash management?
Neutral
Important
Decreased
6%
No change
No change
6%
Increased
significantly
16%
21%
52%
73%
30%
Somewhat
increased
Very important
Source: REL, summer 2009
Source: Aberdeen Group, Dec 2009
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©2010 Financial Operations Networks LLC
Financial Supply Chain
Impact on Working Capital
3
Trade
Finance
4
Receive
Goods
5
Reconcile
Invoice
6
Resolve
Disputes
7
Approve
invoice
Purchase
8
1
Pay invoice
Working Capital
Buyer
8
Supplier
2
Reconcile
Payment
Acknowledge
3
Trade
Finance
4
Produce &
Deliver Goods
5
Invoice Buyer
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6
7
Resolve
Disputes
Receive
Payment
AP Efficiencies
Improve Multiple Areas
Accounts Payable
Working Capital
Net Profit
• Increases visibility
• Reduces cost
• Increases cash
• Increases ROI
• Improves optimization
• Lowers cost
of financing
Compliance/Audit
Supplier Relations
• Improves regulatory
compliance
• Reduces short-term
financing costs
• Optimizes spend
strategy
• Lowers cost for audit
responses and
questions
• Decreases possibility
of non-delivery
• Improves decisions
• Recues risk
• Minimizes likelihood
of credit hold
• Lowers operational
cost
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©2010 Financial Operations Networks LLC
Performances in
Accounts Payable
Definition of Maturity Class
Best in Class
Top 20%
Mean Class Performance
• $2.18 cost to process an invoice
• 2.8 days to process an invoice
*
*
• 34 days payables outstanding (DPO) **
Industry Average
Middle 50%
• $9.38 cost to process an invoice
• 15.8 days to process an invoice
*
*
• 41 days payable outstanding (DPO)
Laggard
Bottom 30%
• $34.11 cost to process an invoice
• 35.1 days to process an invoice
**
*
*
• 56 days payable outstanding (DPO)
**
Sources: * Aberdeen Group, September 2008
* * Aberdeen Group, December 2009
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©2010 Financial Operations Networks LLC
The Technology
Adoption Curve
e-Invoicing Technology Migration
Adoption
Curve
Innovators
1996 –2000
Early
Adopters
2004-2008
“The Chasm”
Early
Majority
Late
Majority
Laggards
2009-2011
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Barriers to Adoption
of e-Invoicing Solutions
45%
41%
15%
13%
Lack of Budget
Curent Process
Works
No Executive
Sponsorship
Lack of Resources to
Manage
13%
12%
No Expected ROI
Lack of
Understanding
Source: PayStream, 2010
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©2010 Financial Operations Networks LLC
What Constitutes
an e-Invoice
Invoice data is received in a
digitized, electronic format
and is matched electronically
to key data for validation.
Approvals are business rule
based by designated
individual(s) or automatically
via STP. Discrepancies are
automatically identified and
electronically communicated
to suppliers for resolution.
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©2010 Financial Operations Networks LLC
What e-Invoicing
Solutions Do
Data
Receipt
Supplier
Enablement
Data
Reconciliation
Match & Process
Exceptions
Payment
Cash Flow &
Communications
Review
& Report
Transparency &
Analytics
• File conversion
— EDI
— XML
— Etc.
• Line level
validation
• Take discount
options
• Supplier
assessment
• Multi-matching
• Schedule payment
• PO flip
• Approval routing
• Notify supplier
• Manage supplier
spend/usage
• Web entry
• Exception handling
• Notify treasurer
• Audit &
Compliance
• Opportunity
assessment
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©2010 Financial Operations Networks LLC
Automation Changes
the Role of AP
Pre-automation
Post-automation
Paper chaser
Business intelligence provider
Invoice processor
Spend management advisor
Inquiry detective
Payment strategist
Cost center
Income producer
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©2010 Financial Operations Networks LLC
What Companies are Doing
to Solve AP Problems
Percentage of Companies with Automation Tools
P-card
60%
T&E
Automation
43%
Automated
Workflow
e-Invoicing
38%
10%
Front-end
Scanning
Traditional
EDI
40%
30%
Source: The Accounts Payable Network, Oct 2009
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©2010 Financial Operations Networks LLC
Top Financial Automation
Goals for 2009
Increase Electronic
Invoicing
48%
Approval Workflow
for Invoices
36%
Implement
Invoice Imaging
34%
Automate Payment
Processing
27%
ERP Application
Upgrade
Outsource Portions
of AP Process
23%
8%
Source: PayStream Advisors, Q2 2009
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AP Road to Automation
• Vision
• Executive Involvement
• Process Redesign
• Automation with StraightThrough-Processing
• Collaboration and Communication
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Learn from the Trailblazers
• Not all vendors are equal
• You need an ROI
• Scanning is a good place to start
• Vendor must support the “ROI” required
number of suppliers
• Suppliers WILL need coaxing to migrate
to e-invoicing
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©2010 Financial Operations Networks LLC
Put Vendors to Work
• Vendors offer different options—understand
their products
• Vendors have different types of clients—talk
to at least three of them
• Vendors are very knowledgeable—learn
from them
• Vendors can help with the business
case—use them
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©2010 Financial Operations Networks LLC
Survive the 21st Century
“It is not the strongest of the
species that survives, nor the
most intelligent that survives,
but the one most responsive to
change.”
— Charles Darwin
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©2010 Financial Operations Networks LLC
Entire contents © 2010 Gillespie International, Inc. All rights reserved. All information is protected by U.S. and
International copyright law and conventions. Except as set forth herein, direct or indirect reproduction of the
information provided herein, in whole or in part, by any means, is prohibited without the express written
consent of Gillespie International, Inc. Any slides that are delivered as part of a speech by Gillespie
International, Inc., employees may be shared only with those attending the speech. Gillespie International,
Inc., shall not be liable for any damages incurred by or arising as a result of reliance upon Gillespie
International, Inc., information.
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©2010 Financial Operations Networks LLC
Questions
To ask a question, please press *1
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If you have further questions,
please e-mail them to
[email protected]
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©2010 Financial Operations Networks LLC
Thank You!
For further information on this topic, contact
The Accounts Payable Network
2100 RiverEdge Parkway, Suite 380
Atlanta, GA 30328
Contact: [email protected]
866-827-6389
770-984-1184
www.TAPN.com