E-Invoicing Strategies for Spend Management Matching a purchase order to an invoice will improve compliance, but what do you do when a transaction has no PO? Learn how to reduce errors, exceptions, and processing costs in such cases.
Quick point on need to look outside the four walls of your enterprise…Deloitte’s third quarter 2011 Signals survey of 91 CFOs in North America with >$3billion in annual revenuesAs CFOs’ focus on growth appeared to slow somewhat this quarter, their focus on existing operations appeared to rise. Overhead cost reduction is a top concern for 26% of CFOs (up from 20% last quarter) and direct cost reduction is a top concern for 11%. CFOs also appear more focused on core operations, with 28% of CFOs citing operations and supply chain risks as a top challenge—up from 13% last quarter. So we have a collaboration imperative that is key for both process cost containment, cash flow control, as well as growth. In fact, a recent McKinsey study revealed that organizations using collaborative technology to connect internal efforts to customers, suppliers, and trading partners are 50% more likely to lead their market segments and achieve higher margins. These networked enterprises are enjoying a competitive advantage through inter-enterprise collaboration while those organizations relying on internal process automation alone are falling behind. Let me share a few quick examples…
Quick slide to point out that collaboration is key to mitigating supply chain risk. A recent WSJ article shows that large corporate treasurers are keeping cash in highly liquid, highly secure short term securities at unprecedented levels while controllers are stretching supplier payment terms. At the same time, availability of credit for smaller and mid-size suppliers is very tight. This creates a serious tension between buying organizations and suppliers. Buyers are looking for higher-yield lower-risk returns on their growing pile of short term cash, and sellers are looking for liquidity relief from tight credit markets and extended payment terms. So many suppliers are looking to their customers flush with cash for early payment discounts and other supply chain financing options to provide them the liquidity relief they need, which ultimately reduces the buyer’s supply chain risk. Here’s the article: http://online.wsj.com/article/SB10001424053111904007304576494633247890952.html?mod=WSJ_hp_LEFTTopStories A couple of key quotes: “Although the S&P downgrade threatens to dry up already thin trading in the investment-grade-bond market, rates remain relatively low on a historical basis for corporate borrowers, and their borrowing is likely to pick up, Mr. Bender said. Indeed, companies of all stripes moved to bolster their finances last week, prior to the downgrade. A raft of investment-grade companies including Coca-Cola Co., Hyatt Hotels Corp., J.P. Morgan Chase & Co. and Kinder Morgan Energy Partners LP sold about $5 billion of bonds.But rather than using these funds for hiring, capital expenditures, or even shareholder dividends, corporations are filling their coffers further, said Mr. Carfang of Treasury Strategies.” And this: Those hoping that executives are looking for an excuse to loosen the purse strings are headed for a disappointment, said Steven Lear, deputy chief investment officer at J.P. Morgan Asset Management."We see these large surpluses held by Asian countries and that's a natural response to the crisis they went through in 1997-1998, saying 'You know what, we're never going to be short cash again,' " Mr. Lear said."Corporate treasurers in the U.S. went through that in 2008, and their reaction is going to be the same."Companies are hoarding cash because interest is at historic lows. Coupled with the tight credit markets, this has created a liquidity problem and significant risk in the supply chain. How are corporations that have excess cash dealing with it in the current environment?To the extent we can, we are hoarding it a little, just like the banks are. People want to have a little something in their rainy-day fund because things are so volatile right now. Our investments are extremely conservative—bank deposits, treasuries—and we want to know more about what we are investing in. …
Quick overview of Ariba’s organic growth coupled with its recent acquisitions of Quadrem (souther hemisphere) and b-process – France and Europe make Ariba the standard for global e-Invoicing The last Quadrem spend number we reported was $39 billion in spend (rather than 36 b). The approximate count is 4m POs and 3.2M invoices for Q. b-process have ~3,500 paying customers. I am not sure if the 80,000 is correct. They have ~28,000 trading partners on their Bill Manager electronic platform and many more that receive manual documents but not sure of total (you may want to just stick to electronic). They have >40,000 million invoices and >$80M spend so I would add > or +.Note: Invoice volume poised to eclipse PO volume in the Ariba Network in 2012 – stay tuned!!B-process’ e-invoicing solutions handle more than 40 million invoices a year with an estimated value of more than $80 billion, and its customers include such large corporates as Carrefour, EADS, Eurocopter and Saint-Gobain.B-process adds 23,000 buyers and 57K suppliers 80K trading partners
[walk through samples quickly]So how does your organization measure up?To help answer this, our guest speaker, Kurt Albertson,a senior advisor in The Hackett Group’s Procurement practice where he advises executives on strategic business decisions and promotes thought leadership through research and speaking on topics in the Procure-to-Pay and broader Supply Chain space, will provide the latest benchmarks across the procure-to-pay function to help your organization establish a business case for procure-to-pay automation and working capital optimization.
Ariba E-Invoicing - Strategies for Collaborative Commerce
Ariba E-InvoicingStrategies for Collaborative CommerceOctober 2011 James Tucker Director Product Marketing Ariba Network & Finance Solutions (650) 390-1702 firstname.lastname@example.org
Collaboration Challenges with Invoice Processing 800K invoices processed off shore per year – 85% paper / 15% EDI • <1% (2K) have a data entry errors • 15% (122K) have data or business rule exceptions • 8% (64K) have inbound supplier inquiries Offshore AP 64K Inquiries inquiries 2K Inquiries Buyer Mailroom data entry Accrue errors Supplier Forward Rubber Segregate & Paper Data Entry Sort & Open Invoices stamp ERP / Payables Matching Allocate VAN Billing & Receivables EDI Approval Routing & Back out, Void Schedule Payment Invoices Exception Handling Print & Mail Supplier Mailroom 122K business errors Paper BU / Buyers Invoice with Exception Letter Segregate & Send to ARManual Process Supplier Resolve Exceptions LEGEND
Roadmap to Touchless Processing Zero - Touch Paper Free Imaging Enabled Paper Based Smart Manual Workflow E-Invoicing Invoicing5 PAYSTREAM FINANCIAL FINANCIAL AUTOMATION SURVEY PAYSTREAM AUTOMATION SURVEY
Process Efficiency is the Key to Success e-Invoicing -- the First Step to Maximizing Discount Capture Reduce invoice approval cycle time to: Avoid late payment fees 3% Drive out cost while improving efficiency Maximize early payment discount savings Mitigate supply chain liquidity riskDiscount Rate 2% Approvals Example discount term: e-Invoice Paper Invoice Approvals 2%10 Net 30 Reduce 1% Cycle Time 10 30 60 20 Days of Invoice Approval and Payment