AP As Chief Compliance Officer - How eInvoicing Can Stop Savings Leakage and Close the Loop on P2P Savings

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Reducing invoice processing costs and eliminating paper are often top of mind for an invoice automation initiative. Even greater value, however, comes from the ability of e-invoicing to drive …

Reducing invoice processing costs and eliminating paper are often top of mind for an invoice automation initiative. Even greater value, however, comes from the ability of e-invoicing to drive compliance to preferred suppliers and negotiated pricing from contracts. Attend this session and learn how Ariba e-invoicing provides valuable compliance support that can’t be matched with a manual, paper-based approach. This session is intended for those with some Ariba experience.

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  • 1. #AribaLIVE AP as Chief Compliance Officer: How E-Invoicing Can Improve Compliance and Close the Loop on Procure-to-Pay Savings Chris Rauen, Solutions Marketing Manager, Ariba Eduardo Sanchez, Senior Director - Strategic Sourcing and Indirect, ADT March 18, 2014 © 2014 Ariba – an SAP company. All rights reserved. @ariba
  • 2. Contract Leakage at Home © 2014 Ariba – an SAP company. All rights reserved.2
  • 3. Compliance Benchmarks 3 Increasing compliance rates by 10% can drive over $4 million in value per $1 billion in spend Type Key Performance Indicator (KPI) Laggards Average Innovators Compliance % Compliance to Contract Values (H) 60% 76% 86% Compliance $ Savings leakage (per $1 Billion) (H) $18.8M $9.4M $4.8M Lost Savings per $ Billion of Indirect Spend due to Contract Non-Compliance Compliance to Indirect Preferred Supplier Contract © 2014 Ariba – an SAP company. All rights reserved.
  • 4. Ariba Compliance Drivers • Purchase Order – Invoice Automation PO as control document for network-based smart invoicing Supplier collaboration – Extended status visibility PO pricing and terms compliance • Contract Invoicing Services contract as control document Supplier collaboration – Extended status visibility Services contract pricing and terms compliance © 2014 Ariba – an SAP company. All rights reserved.4
  • 5. Ariba SMART Invoicing – 3 Levels of Defense  The Best Invoice solution is one that is TOUCHLESS!  Ariba SMART Invoicing drives auto post rates of 98% compared to less than 60% with other solutions Faster cycle benefits buyers & suppliers Ariba rejects exceptions back to suppliers Supplier Supplier Supplier Supplier Supplier Level 2 Level 1 Level 3 Invoices Confirmations 98% Touchless  Lower AP Cost  Faster Cycles  Lower Risk Account Coding Contract & Receipt Match Price & Tax Compliance GST/VAT Compliance PO & PO- Line Match Buyer Match (non PO) UOM & SKU Change Currency Match Sub Total & Total Amount PO-Line Change Line & Total Consumption Thresholds Shipping & Tax Thresholds Invoice Number Bill To / Ship To PO Number Requestor (Non PO) Invoice Date VAT / GST IDs Level 1 – Basic field-level existence - PO and non-PO verification Level 2 – Intermediate field-level, PO and non-PO line level, change and tax verification Level 3 – Advanced account coding, matching and compliance Customer 5 © 2014 Ariba – an SAP company. All rights reserved.
  • 6. About ADT • 140-year-old company - Spun off from Tyco First security company to offer mass-market, home automation services $3.2B in revenues, 6.4M customers • Largest field network in the industry 400 exclusive, authorized dealers 200+ field locations (U.S./Canada) Answers 19M alarm signals each year © 2014 Ariba – an SAP company. All rights reserved.6
  • 7. Business Process Transformation • Six Sigma legacy Assess subscriber acquisition, customer service costs Target subcontractor invoice process for improvement – Improve control over major source of spend – Reduce subscriber acquisition costs (SAC) • Extend existing infrastructure Oracle for financials/supply chain management Specialized, homegrown systems for job management, dispatches services, other functions © 2014 Ariba – an SAP company. All rights reserved.7
  • 8. Business Challenge • Sub-contractors managed by local branches Complex, resource-intensive invoice management process – Manual invoice review – approval process – Large number of change orders – Too many invoice-contract match errors – No line item detail for improving control over spend • Few IT resources for support Focus on separating from parent company Tyco © 2014 Ariba – an SAP company. All rights reserved.8
  • 9. Business Goals • Eliminate overpayments Reduce spend on subcontractor labor, MRO small tools by 10% • Drive compliance to approved vendors and products Standardize contracts – implement catalogs (CIF and punch-out) • Improve accuracy of cash flow and accruals forecasts • Reduce time spent tracking invoices inquiries • Deploy with minimal IT resources © 2014 Ariba – an SAP company. All rights reserved.9
  • 10. #AribaLIVE Oracle S U P P L I E R INTEGRATION TOOLKIT ARIBA P2P Remittance Remittance Remittance ARIBA NETWORK S U P P L I E R B U Y E R Invoice StatusOK 2 Pay export Upon submission, Invoice created on AN Invoice Status (Approved OR Rejected) Invoice Reconciliation Set up Contracts Master Data Account Coding and Approval Solution Footprint: Ariba P2P Invoice vs. Contract Invoice 1 2 Vendor punch-in to Invoice vs. contract …and pushed to P2P for reconciliation 3 4 56
  • 11. Results with Ariba • Improved invoice-contract match rate Centralize management of contracts Validate invoices against contracted pricing Validate miscellaneous charges • Improved control over spend Verify services billed agree to services performed Standardize items to compare costs by vendor © 2014 Ariba – an SAP company. All rights reserved.11
  • 12. More Results from Ariba • Prevention of contract leakage Visibility into contracted rates Capture line item detail Leverage transaction data for future negotiations • Speed invoice processing cycle – lower costs Segment invoice approvals by Operations Support Center - AP • Consolidation of vendors/spend © 2014 Ariba – an SAP y. All rights reserved.12
  • 13. Next Steps • Expand supplier engagement New supplier categories, contracts and catalogs • Automate new spend categories Professional services, IT, MRO purchases, facilities, temp labor • Dynamic discounting Lower costs of goods and services Earn risk-free, double digit annual returns on cash © 2014 Ariba – an SAP company. All rights reserved.13