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Slide 1©2009 Financial Operations Networks LLC
Agenda• Introduction• Current State• Automation benefits beyond cost• Process change and Automation• Solution Selection• S...
Introduction “Over the past 40 years, the greatest contributions in innovation have come in the area of information techno...
Introduction (Continued) • AP has struggled to keep pace   ― For many companies automation was beyond their     reach   ― ...
Only 15% of companiesare highly automated                                Slide 5                ©2009 Financial Operations...
The Problem • Many companies have automated only a few processes,   such as e-invoicing • Scanning is often still a back e...
Top-performing firms gain majorbenefits in five key ways:  1. Procurement advantage, through better cost analysis  and con...
Key Concerns of AP                              Slide 8              ©2009 Financial Operations Networks LLC
Key Concerns of the CFO • About the economy  ― Consumer demand  ― Federal government policies  ― Price pressure • About th...
Key Concerns,Federal Government Policy                Regulation• Sarbanes-Oxley Act   ― Results in increased control over...
Key Concerns of AP Don’t Match CFO’s                                     Slide 11                      ©2009 Financial Ope...
Combining the Goals • Both sets of goals can be met using:   ― Process change      • i.e. Centralizing AP   ― Automation  ...
Top Reasons for Productivity Rise        Improvements in                                                                  ...
Productivity Rise, Process  It is the combination of the automatedsolutions with process change that return              t...
Process Change, Automation • Utilize machine to machine e-invoicing   ― XML, EDI or HTML preferred, although XML etc. can ...
Automation’s Effect on Costs                               Slide 16                ©2009 Financial Operations Networks LLC
Automation Benefits, Visibility • Automation allows for the data to be visible from   the moment of entry.   ― Accruals ca...
Benefits beyond Cost, Discount Capture  Companies with the best cycle times can target                discount capture.  •...
Early Payment Discount CaptureYields Lucrative Annualized ReturnsExample: Typical 2/10 Net 30 on $100 Invoice       Option...
Better Vendor Pricing• Spend analysis  ― Aberdeen consulting estimate that US business leave $260    billion on the table ...
Benefit Example • Our sample company has:   ― Sales Of $250 million   ― Profit before tax $25 million   ― Cost of Goods pu...
Most Commonly UsedInvoice Delivery Methods                               Slide 22                ©2009 Financial Operation...
Workflow • Workflow   ― Routing of Invoiced for approval      • Use negative or assumed approval   ― Add accounting codes ...
Portal • Self Service   ― All information can be distributed directly to end users      • PO.s, RAs, Tax and legal agreeme...
Solution Selection • Key Considerations.   ― Build for today and tomorrow   ― Scalability, do you have monthly or seasonal...
The Ideal Solution                                Slide 26                 ©2009 Financial Operations Networks LLC
Solution Selection • In house license   ― Most common Practice, gives the company complete     control over system. • Util...
Solution Selection, The Cloud                              Slide 28               ©2009 Financial Operations Networks LLC
The Cloud, Additional Benefits  • Back up and recovery    ― Off site storage and back up  • Automatic updates to software ...
Solution Selection  • Key Considerations in selecting a software    partner.    ― Select one who handles;       • the larg...
Case Study, Small Business • Business involved in Training, Service and Retail   ― 50% of revenue from retail and governme...
Case Study, Small Business AP Purchasing     ― Multiple suppliers / lines carried     ― Paying “list price” for all orders...
Case Study, First Steps • Analyzed spend over a six month period by   supplier and SKU • Compared suppliers as to range of...
Case Study, Small Business • Reduced key suppliers to 3   ― One “high end”   ― One “Medium Priced”   ― One slightly below ...
Case Study, Small Business • Sample, Supplier Program    Part #    Tier 1         Tier 2          Tier 3              Core...
Next Steps • Move to a cloud based solution   ― Back up in place • Reasons for this Move   ― Allow access from remote loca...
Summary• By implementing process change and automation  companies can meet both AP and CFO’s goals ― For AP    • Improve P...
Thank You!For further information on this topic, contact:  The Accounts Payable Network  2100 RiverEdge Parkway, Suite 380...
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[Webinar] Benefits of AP Automation: Why Companies of All Sizes Should Be Taking Advantage

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Why Companies of All Sizes Should Be Taking Advantage
Speaker: David Hay, Consultant

Listen to the webinar recording here: https://www2.gotomeeting.com/register/834071794

The Accounts Payable Network reveals how accounts payable can go beyond just paying invoices accurately and on time and contribute to the organization’s success by:

- Implementing automation technology in AP to provide a complete real-time view of the
company’s financial condition;
- Delivering visibility to allow for faster, more accurate financial reporting and audits;
- Enhancing controls and adherence to corporate policies
-And much more!

Published in: Economy & Finance
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  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Paths to Continuous Payables Process Improvement May 22-23 -- Atlanta, GA
  • Transcript of "[Webinar] Benefits of AP Automation: Why Companies of All Sizes Should Be Taking Advantage"

    1. 1. Slide 1©2009 Financial Operations Networks LLC
    2. 2. Agenda• Introduction• Current State• Automation benefits beyond cost• Process change and Automation• Solution Selection• Small Business Case Study• Summary Slide 2 ©2009 Financial Operations Networks LLC
    3. 3. Introduction “Over the past 40 years, the greatest contributions in innovation have come in the area of information technology.” But companies will take time to learn how to use them, so it will probably be many decades before their full impact is felt.” (The Economist Jan 12th 2013) Slide 3 ©2009 Financial Operations Networks LLC
    4. 4. Introduction (Continued) • AP has struggled to keep pace ― For many companies automation was beyond their reach ― Increased legislation in the post Enron 9/11 world has increased the pressure on AP ― The difficult world wide economy has increased the pressure on operational cost and efficiency Slide 4 ©2009 Financial Operations Networks LLC
    5. 5. Only 15% of companiesare highly automated Slide 5 ©2009 Financial Operations Networks LLC
    6. 6. The Problem • Many companies have automated only a few processes, such as e-invoicing • Scanning is often still a back end process • The approval process is still manual with an image used instead of paper • Little or no use of automated workflow or matching • Small to medium sized companies often find it difficult to justify automation on cost savings alone Slide 6 ©2009 Financial Operations Networks LLC
    7. 7. Top-performing firms gain majorbenefits in five key ways: 1. Procurement advantage, through better cost analysis and contract management 2. Cash management advantage, through better forecasting and working capital management 3. Discount and rebate advantage, plus penalty avoidance 4. Compliance with SOX and other government regulations 5. Cost advantage Slide 7 ©2009 Financial Operations Networks LLC
    8. 8. Key Concerns of AP Slide 8 ©2009 Financial Operations Networks LLC
    9. 9. Key Concerns of the CFO • About the economy ― Consumer demand ― Federal government policies ― Price pressure • About their own companies ― Ability to maintain margins ― Ability to forecast results ― Working Capital Management Slide 9 ©2009 Financial Operations Networks LLC
    10. 10. Key Concerns,Federal Government Policy Regulation• Sarbanes-Oxley Act ― Results in increased control over financial operations, Corporations are required to document processes to assure compliance with sound business practices. ― CFO (and CEO) has to “Sign off” on accuracy of financial documents.• OFAC ― Companies are required to comply with all aspects of the Patriot Act as regards to who they do business with, i.e. vendors.• FCPA (Foreign Corrupt Practices Act) ― Applies to a companies to customers and vendors Slide 10 ©2009 Financial Operations Networks LLC
    11. 11. Key Concerns of AP Don’t Match CFO’s Slide 11 ©2009 Financial Operations Networks LLC
    12. 12. Combining the Goals • Both sets of goals can be met using: ― Process change • i.e. Centralizing AP ― Automation • Improved visibility • Margin maintenance through spend analysis • Manual processes replaced • On time payments Slide 12 ©2009 Financial Operations Networks LLC
    13. 13. Top Reasons for Productivity Rise Improvements in 62% business process   Improvements in 50% technology   37% More hours Worked     Better morale or 31% teamwork   Slide 13 ©2009 Financial Operations Networks LLC
    14. 14. Productivity Rise, Process It is the combination of the automatedsolutions with process change that return the best results• AP and Purchasing work to improve the complete purchase to Pay Cycle • Centralization of AP into a shared service environment • PO distribution, front end Scanning, e-invoicing, workflow and payments integrated into a complete solution Slide 14 ©2009 Financial Operations Networks LLC
    15. 15. Process Change, Automation • Utilize machine to machine e-invoicing ― XML, EDI or HTML preferred, although XML etc. can be used • Use a portal to allow small players to create invoices on line, or “flip” purchase orders. • Use workflow for internal matching and resolution • Move to e-payments Slide 15 ©2009 Financial Operations Networks LLC
    16. 16. Automation’s Effect on Costs Slide 16 ©2009 Financial Operations Networks LLC
    17. 17. Automation Benefits, Visibility • Automation allows for the data to be visible from the moment of entry. ― Accruals can be accurately made ― Invoices can be tracked by AP, purchasing and Vendors from entry through to payment • The auditors of one failing UK company found 50,000 invoices that had not been entered or accrued. ― Finance can accurately forecast cash requirements ― Management can track progress against goals Slide 17 ©2009 Financial Operations Networks LLC
    18. 18. Benefits beyond Cost, Discount Capture Companies with the best cycle times can target discount capture. • Discounts ― 2 /10 net 30 can return over 35%. One major corporate estimated a $200 million addition to the bottom line from discounts • Offer discounts as an alternative to extended terms. One company offered 1.5 / 15 or 60 days. Slide 18 ©2009 Financial Operations Networks LLC
    19. 19. Early Payment Discount CaptureYields Lucrative Annualized ReturnsExample: Typical 2/10 Net 30 on $100 Invoice Option 1: Pay $100 on Day 30 Option 2: Pay $98 on Day 10 $100 minus Interest $98 + Interest = $99.73 @ 5%/yr Interest = $100 $100 $98 20 days 20 days 20  i  FV = PV 1 +  Day 0 Day 10 Day 30 Day 0 Day 10  365  Day 30 20  i  100 = 981 +   365  i = 0.3689 $2 Interest over 20 days implies Interest Rate of 37%/yr!!! Slide 19 ©2009 Financial Operations Networks LLC
    20. 20. Better Vendor Pricing• Spend analysis ― Aberdeen consulting estimate that US business leave $260 billion on the table by not taking advantage of discounts and contract negotiation • Companies are often buying the same product from the same vendors at different prices ― Reduce the Number of Vendors ― Supply Standardization • For Example buying less expensive pens, paper etc. Let’s look at an example Slide 20 ©2009 Financial Operations Networks LLC
    21. 21. Benefit Example • Our sample company has: ― Sales Of $250 million ― Profit before tax $25 million ― Cost of Goods purchased, 45% of revenue • Many companies achieve a 10% reduction in price paid for goods and services. ― In this example if 10% reduction is on only 50% of spend the return to the bottom line is $5.6 million Slide 21 ©2009 Financial Operations Networks LLC
    22. 22. Most Commonly UsedInvoice Delivery Methods Slide 22 ©2009 Financial Operations Networks LLC
    23. 23. Workflow • Workflow ― Routing of Invoiced for approval • Use negative or assumed approval ― Add accounting codes to the invoice automatically from the PO • One company study showed 50% error rates on invoices where buyer/requestor added the account info. Slide 23 ©2009 Financial Operations Networks LLC
    24. 24. Portal • Self Service ― All information can be distributed directly to end users • PO.s, RAs, Tax and legal agreements etc. • Invoices can be generated, or uploaded to the site – PO flip can be used. • Client Service ― Virtually eliminates the need for phone based customer service. Slide 24 ©2009 Financial Operations Networks LLC
    25. 25. Solution Selection • Key Considerations. ― Build for today and tomorrow ― Scalability, do you have monthly or seasonal fluctuations to consider, are you allowing for M and A activity. ― Consider short term options as part of the long term solution • E.g.Use scanning while automating invoice or payment processing Slide 25 ©2009 Financial Operations Networks LLC
    26. 26. The Ideal Solution Slide 26 ©2009 Financial Operations Networks LLC
    27. 27. Solution Selection • In house license ― Most common Practice, gives the company complete control over system. • Utilize Software As A Service (SAAS) ― For smaller companies this can be a complete solution, for larger companies can be utilized as a component, i.e. payments or e-invoicing. ― Can be an interim solution while staging a full automation program. Slide 27 ©2009 Financial Operations Networks LLC
    28. 28. Solution Selection, The Cloud Slide 28 ©2009 Financial Operations Networks LLC
    29. 29. The Cloud, Additional Benefits • Back up and recovery ― Off site storage and back up • Automatic updates to software and applications • Secure accessibility from any location • Flexible Pricing Slide 29 ©2009 Financial Operations Networks LLC
    30. 30. Solution Selection • Key Considerations in selecting a software partner. ― Select one who handles; • the largest range of document types, and input methods. • Has a large client base, with experience in your industry • Has multi-country reach and experience Slide 30 ©2009 Financial Operations Networks LLC
    31. 31. Case Study, Small Business • Business involved in Training, Service and Retail ― 50% of revenue from retail and government contracts • Old POS system • POS and Spread sheets used for accounting system • No scanning, e-invoicing or payment systems used Slide 31 ©2009 Financial Operations Networks LLC
    32. 32. Case Study, Small Business AP Purchasing ― Multiple suppliers / lines carried ― Paying “list price” for all orders ― Margins between 35% 40% ― Unable to compete on government bids ― Web merchants offering lower prices Slide 32 ©2009 Financial Operations Networks LLC
    33. 33. Case Study, First Steps • Analyzed spend over a six month period by supplier and SKU • Compared suppliers as to range of products carried, customer service, delivery etc. • Looked at requirements for volume pricing Slide 33 ©2009 Financial Operations Networks LLC
    34. 34. Case Study, Small Business • Reduced key suppliers to 3 ― One “high end” ― One “Medium Priced” ― One slightly below “Medium Priced” • Signed annual spend commitments with these three suppliers. ― Commitments ranged from $6,000 to $20,000 ― Increased margins to 50%-75% ― Allowed us to price more competitively with web ― Lower COGS allowed us to more aggressive, and win government bids. Slide 34 ©2009 Financial Operations Networks LLC
    35. 35. Case Study, Small Business • Sample, Supplier Program Part # Tier 1 Tier 2 Tier 3 Core + Retail 55.26 $27.00 $24.00 $21.50 $19.00 $59.95 Margin 54.96% 59.97% 64.14% 68.31% Spread 13.34% 30.1 $240.00 $225.00 $225.00 $218.00 $474.95 Margin 49.47% 52.63% 52.63% 54.10% Spread 4.63% Slide 35 ©2009 Financial Operations Networks LLC
    36. 36. Next Steps • Move to a cloud based solution ― Back up in place • Reasons for this Move ― Allow access from remote locations, i.e. off site bookkeeper ― Disaster recovery, • Server lost after major storm. Data was backed up but new system software was not compatible with (old) operating systems Slide 36 ©2009 Financial Operations Networks LLC
    37. 37. Summary• By implementing process change and automation companies can meet both AP and CFO’s goals ― For AP • Improve Process and reduce errors • Automate manual Process • Improving Productivity ― For the CFO • Maintain (or improve) margins • Forecast results Accurately • Improve Working Capital management Slide 37 ©2009 Financial Operations Networks LLC
    38. 38. Thank You!For further information on this topic, contact: The Accounts Payable Network 2100 RiverEdge Parkway, Suite 380 Atlanta, GA 30328 David W Hay dhay@finopsnet.com 866-827-6389 770-984-1184 www.TAPN.com Slide 38 ©2009 Financial Operations Networks LLC
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