MC                                        Managing Cash                                          Better in an Era of      ...
The Rise of the Networked Economy                                                                                         ...
What can European companies and CFOs    do to ensure ongoing focus and    sustainability? Create a “Cash Culture”“Although...
MC                                          Managing Cash                                          Better in an Era of    ...
Working Capital Ratios            Distribution of Working Capital Components- Europe            AP           34%          ...
Payment Habits - Domestic/ForeignOverdue Invoices                                              Source:Atradius6   © 2012 A...
Credit Manager‟s Index                                              Source: National Association of Credit Management7   ©...
Impact of Working Capital on CorporateValue8   © 2012 Ariba, Inc. All rights reserved.
Impact of AP on Corporate Value9   © 2012 Ariba, Inc. All rights reserved.
Impact of AR on Corporate Value10   © 2012 Ariba, Inc. All rights reserved.
The Portfolio of SCF Instruments (today)•    Accounts Payable-centric            Approved payables finance based on suppli...
Supply Chain Finance - Expanding theWindow of Opportunity                           DAY                             0     ...
Main Business Models in SCF       Model                                      Value                  Supporting Technology ...
The Portfolio of SCF Instruments (tomorrow)•    Accounts Payable-centric            Approved payables finance based on sup...
MC                                          Early Pay Discount                                          Programs          ...
Early Payment Discount Strategy                                               35%16   © 2012 Ariba, Inc. All rights reserv...
“     Discount Benchmarks                                                                         “      2-for-1          ...
Process Benchmarks                                                  60-80% cost take out – or about $1 million for      PR...
Opportunities to Maximize Discount                 Capture Success                   3%                                   ...
Correlation between Supplier     Collaboration with e-Invoicing     and Discount Capture                            $1M   ...
Best Practice: Increase Discount Capture     Capture Missed Discounts & Increase New Discounts                            ...
E-Invoicing Identified as The     Primary Enabler for Working Capital22   © 2012 Ariba, Inc. All rights reserved.
E-Invoicing: THE Business Driver for     Strategic Savings E-Invoice considered THE document regarding      working capita...
MC                                          Invoice2Cash                                          Supply Chain            ...
summary       1.         Presentation of b-process       2.         Supply Chain Finance, an original financing method    ...
b-process     b-process brings 11 years of Invoice     Management experience in France and across     the globe     130 pe...
summary       1.         Presentation of b-process       2.         Supply Chain Finance, an original financing method    ...
What is Reverse Factoring?      RF refers to a contract whereby :                -         a buyer                -      ...
A buyer mandates a bank to pay validated     invoices before their due dates, to its     suppliers, on their requests     ...
Reverse Factoring : whom for?                                                             Major buyers                    ...
Reverse Factoring : with which objectives?                                                                     Client     ...
Reverse Factoring : a financial     mechanism that benefits all parties                                                   ...
summary       1.         Presentation of b-process       2.         Supply Chain Finance, an original financing method    ...
Invoice2Cash®, the collaborative platform     that the Supply Chain Finance lacked                      Without Invoice2Ca...
Reverse Factoring : Maximize benefits     with e-invoicing                                                                ...
Invoice2CASH® : Pattern                                               1. Invoicing data is uploaded on the Invoice2Cash   ...
Some „Invoice2Cash‟ Screenshots37    © 2012 Ariba, Inc. All rights reserved.
summary       1.         Presentation of b-process       2.         Supply Chain Finance, an original financing method    ...
Why should you start a Reverse Factoring     program (Buyer side benefits) ?              Secure your suppliers with no i...
summary       1.         Presentation of b-process       2.         Supply Chain Finance, an original financing method    ...
A Supply Chain Finance program can be carriedout in a few simple steps                                                    ...
Your contacts                                               Sales                                               Jean-Cyril...
James Tucker                                                                                                      Global D...
Share This Session…NOW…from     your mobile!     •   All presentations are posted:                   Guidebook mobile app ...
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Managing Cash Better in an Era of Limited Growth

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  • Managing Cash Better in an Era of Limited GrowthEnlightened finance and procurement professionals can help optimize cash use and working capital. Join this panel of experts and hear about the latest strategies for extending payables, accelerating receivables, maximizing discount capture for high-yield, risk-free returns on cash reserves and using third parties for financing your supply chain. Attendees will hear about Ariba Discount Professional and b-process's new reverse factoring solution, Invoice2CASH®, and leave with the tools necessary to manage cash better in today's networked economy.
  • enterprises see the benefits that the combination of cloud computing, enterprise apps, mobile and community can bring to their business…CFO Magazine study of global finance executives: View using Networked technologies to better discover, connect, and collaborate with their customers, suppliers, banks, and other trading partners as a top priority for agility and growth.CIO Magazine study found IT executives prioritizing investments to improve external collaboration.Research from Harvard Business Review points to inter-enterprise collaboration as THE key competitive competence going forward.McKinsey’s study on the impact of the Networked Enterprise found Networked Businesses outpace their less Networked peers in nearly every category of business performance…by a wide margin.Sources: CIO: "Increasing the Value of ERP with Cloud-Based Business Commerce Solutions," July 11, 2011CFO Research Services: "The New Deals: Why Companies Are Deepening their Alliances with Customers, Suppliers and Bankers in a Post-Recession Economy, ” April 2011.
  • As Europe moves into a period of recovery and revenue growth, the issue at question is whether the changes made are sustainable and whether companies are truly creating a “cash culture.” Although 60 percent of the companies featured in the survey improved their working capital in the past year, only 5 percent of companies have achieved upper-quartile performance within their industry and have managed to improve in all three working capital elements over a five-year period. So what can companies and CFOs do to ensure ongoing focus and sustainability?So what can companies and CFOs do to ensure ongoing focus and sustainability?Measurement and accountability: Establishing a good measuring system is critical – one that aligns measurement with accountability, reflecting and balancing all elements. However, such a system should not exist just at the top level but throughout the entire organisation.Incentives: The idea of an incentives plan sounds easy, but it is actually very hard for organisations to implement one. The elements driving behaviour of the company’s revenue, profit and cash must be balanced not only at management level but across process owners and sales teams.Organisational alignment and collaboration: It is critical to replace the perception that working capital is just a finance issue with an understanding that working capital comes from an amalgamation of cross-functional policies and processes. Further, companies must balance objectives, margin, cash and sales as well as ensure pricing (for example the discount-terms trade-off) are properly understood and managed. The organisation that succeeds will create structure through in-company committees that help to build awareness and promote best practice policies and processes.
  • The index is based on a survey of approximately 900 US trade credit managers in the second half of each month, with about equal representation between the manufacturing and service sectors. The survey asks respondents to comment on whether they are seeing improvement, deterioration or no change for various favorable and unfavorable factors.A resulting CMI number of more than 50 indicates an economy in expansion; less than 50 indicates contraction.
  • Enrico’s slide
  • This overall strategy can increase your discount savings 2-5x what you are earning today. Many companies have some level of prenegotiated early pay discounts typically with less than 5% of their supplier base. And due to inefficient, paper-based invoice processing, most companies capture less than half of the discount savings available to them.  By implementing electronic invoicing with approval workflow, companies are able to approve invoices in 5 days or less and therefore able to capture about 2x what they are today with their existing opportunities.  Companies, like Republic Services, are leveraging Ariba’s cloud-technology and best-practice services to increase their savings 3-5x what they previously captured by increasing the number of suppliers participating in their discount programs during the enrollment process, and introducing sliding scale or dynamic discounts to capture discounts on targeted hurdle rates aligning the buyer’s and the seller’s objectives (i.e. bottom line savings / getting paid faster). Ariba Discount Professional provides buyers and suppliers the visibility and control they need to manage cash better with the Ariba Network by connecting you to nearly 1 million trading partners, many of whom you are already doing business with and many of whom are looking for improved cash flow. Ariba also assigns a customer management executive who helps measure your success against the stated objectives for continuous performance measurement and program adjustments.  The result is an increase of 3x-5x in your early payment discount savings, earning you an APR of 10-30% while providing needed liquidity to your suppliers. This is the “treasure” in treasury.
  • Located in France with capabilities and support on six continents B-process adds 130 experts dedicated to Ariba’s electronic invoicing business, Companies like Eurocopter, L’Oréal, Total, Carrefour, and 32K others exchange invoices over the B-process platform processing over $80 billion in spend annuallyThese customers are also confident that their e-Invoicing solution is VAT/tax compliant in 24 countries. [click] to next slide --
  • Managing Cash Better in an Era of Limited Growth

    1. 1. MC Managing Cash Better in an Era of Limited Growth James Tucker, Global Solution Marketing Director Enrico Camerinelli, senior analyst Aite Group Milan Jean-Cyril Schütterlé, Business Development Manager, B-Process© 2012 Ariba, Inc. All rights reserved.
    2. 2. The Rise of the Networked Economy “Increasingly companies are embracing collaboration as part of their strategy to grow.” 77% increased access to 63% increased 55% knowledge marketing better effectiveness 41% information sharing 43% improved greater collaboration market across silos 24% share increased revenue 8% higher margins “ Networked enterprises are 50% more likely to have increased sales, higher profit margins, gain market share, and be a market leader. ” Source: McKinsey & Company, “The rise of the networked enterprise, Web 2.0 finds it’s payday.” Survey of 4,394 executives. December 20102 © 2012 Ariba, Inc. All rights reserved.
    3. 3. What can European companies and CFOs do to ensure ongoing focus and sustainability? Create a “Cash Culture”“Although 60% of companiesimproved working capital inthe past year, only 5% haveachieved upper-quartile Measurement & Accountabilityperformance. As Europemoves into a period of Incentivesrecovery and revenuegrowth, the question iswhether the changes made Organisational Alignment & Collaborationare sustainable and whethercompanies are creating a“cash culture.”3 © 2012 Ariba, Inc. All rights reserved. Source: The Hackett Group/REL, 2011 Europe Working Capital Survey
    4. 4. MC Managing Cash Better in an Era of Limited Growth Enrico Camerinelli Sr. Analyst EMEA - Aite Group© 2012 Ariba, Inc. All rights reserved.
    5. 5. Working Capital Ratios Distribution of Working Capital Components- Europe AP 34% AR 38% Distribution of Working Capital Components- USA AP 32% AR 36% Source: REL Consulting INV 28% INV 32%5 © 2012 Ariba, Inc. All rights reserved.
    6. 6. Payment Habits - Domestic/ForeignOverdue Invoices Source:Atradius6 © 2012 Ariba, Inc. All rights reserved.
    7. 7. Credit Manager‟s Index Source: National Association of Credit Management7 © 2012 Ariba, Inc. All rights reserved.
    8. 8. Impact of Working Capital on CorporateValue8 © 2012 Ariba, Inc. All rights reserved.
    9. 9. Impact of AP on Corporate Value9 © 2012 Ariba, Inc. All rights reserved.
    10. 10. Impact of AR on Corporate Value10 © 2012 Ariba, Inc. All rights reserved.
    11. 11. The Portfolio of SCF Instruments (today)• Accounts Payable-centric Approved payables finance based on supplier invoices Early supplier payments using Buyer‟s liquidity• Accounts Receivable-centric Receivables finance, factoring and invoice discounting11 © 2012 Ariba, Inc. All rights reserved.
    12. 12. Supply Chain Finance - Expanding theWindow of Opportunity DAY 0 DAY 2-5 Invoice received DAY 17-30 Invoice Invoice Due Date approved for payment with e-Invoicing Invoice approved for payment without e-Invoicing DAY 4512 © 2012 Ariba, Inc. All rights reserved.
    13. 13. Main Business Models in SCF Model Value Supporting Technology (Projection) Integrated financing and payments Bank-centric White-labeled SCF platform services (e.g., FX) Aggregates demand of credit from corporations and then matches with Mediator-centric White-labeled SCF multi-bank platform funding capabilities from pool of lenders – typically banks No intermediation. Supplier TMS and B2B platforms with extended Corporate-centric relationship management capabilities of FX and SCF applications13 © 2012 Ariba, Inc. All rights reserved.
    14. 14. The Portfolio of SCF Instruments (tomorrow)• Accounts Payable-centric Approved payables finance based on supplier invoices Early supplier payments using Buyer‟s liquidity• Accounts Receivable-centric Receivables finance, factoring and invoice discounting• Inventory-centric and “pre-shipment” Purchase Order-based finance and Inventory finance14 © 2012 Ariba, Inc. All rights reserved.
    15. 15. MC Early Pay Discount Programs James Tucker Global Director Finance Solutions, Ariba© 2012 Ariba, Inc. All rights reserved.
    16. 16. Early Payment Discount Strategy 35%16 © 2012 Ariba, Inc. All rights reserved.
    17. 17. “ Discount Benchmarks “ 2-for-1 $2 Million in discount savings for DISCOUNTS every $1 Billion in discountable spend Key Performance Indicator (KPI) Laggards Average Innovators Discountable spend 10% 20% 30% Discount Rate (eg. 2% 10 Net 30) 1% 2% 2.5% Annualized Percentage Rate (APR) 36% 36% 36% Percentage of discounts captured (A) 15% 24% 31% (A) Aberdeen17 © 2012 Ariba, Inc. All rights reserved.
    18. 18. Process Benchmarks 60-80% cost take out – or about $1 million for PROCESS average to large Payables organizations (B) Key Performance Indicator (KPI) Laggards Average Innovators Invoice cycle time receipt-to-approve (P) 45 days 21 days 5 days (13 days EU) Invoices per FTE (H) 6,797 11,364 32,830 (8463 EU) Percentage of invoices with exceptions (A) 30% 17% 12% First pass match rate (H) 65% 70% 85% (59% EU) Percent of electronic invoices (H) 7% 25% 67% (9% EU) Inquiries per 10,000 Invoices (H) n/a 756 n/a (1091 EU) (P) PayStream Advisors (H) The Hackett Group (A) Aberdeen (B) Billentis18 © 2012 Ariba, Inc. All rights reserved.
    19. 19. Opportunities to Maximize Discount Capture Success 3% Example discount term: “ Our goal last year was to achieve 60 percent of addressable invoices for early payment discounts with “ 2%10 Net 30 Ariba and we surpassed that. Discount Rate 2% Reduce Invoice Approval Process Paper Invoice Cycle Time Approvals e-Invoice 1% http://youtu.be/GKXkXYaXNSM 10 30 60 20 Days Source: Dynamic Discount Management: Finding the “Treasure” in Treasury, PayStream Advisors, 201219 © 2012 Ariba, Inc. All rights reserved.
    20. 20. Correlation between Supplier Collaboration with e-Invoicing and Discount Capture $1M 1,000 Vendors Enrolled in Early900 Payment Program Vendors Enrolled in Early Payment 800 Program 700 600 Vendors Participating $0.5M 300 200 Vendors Participating 100 $0M 0In 2011, Republic grew their vendor participation in their Discount Program by nearly 500%, and realized savings of about $1M.20 © 2012 Ariba, Inc. All rights reserved.
    21. 21. Best Practice: Increase Discount Capture Capture Missed Discounts & Increase New Discounts 5x Ariba solutions capture 2-5x discount savings Enroll suppliers at enablement Engage right supplier audience Recent Aberdeen study shows 50% of pre-negotiated 3x Introduce sliding scale discount discounts are never captured Include net term invoices 2x21 © 2012 Ariba, Inc. All rights reserved.
    22. 22. E-Invoicing Identified as The Primary Enabler for Working Capital22 © 2012 Ariba, Inc. All rights reserved.
    23. 23. E-Invoicing: THE Business Driver for Strategic Savings E-Invoice considered THE document regarding working capital optimization (3-for-1) E-Invoice considered THE document regarding VAT reclaim (7-for-1) E-Invoice considered THE document regarding contract compliance (9-for-1) E-Invoice considered THE document to maximize discount capture (2-for-1)23 © 2012 Ariba, Inc. All rights reserved.
    24. 24. MC Invoice2Cash Supply Chain Finance Solution Jean-Cyril Schütterlé, Business Development Manager, B-Process© 2012 Ariba, Inc. All rights reserved.
    25. 25. summary 1. Presentation of b-process 2. Supply Chain Finance, an original financing method 3. b-process’ contribution to Supply Chain Finance 4. The benefits 5. Implementation steps25 © 2012 Ariba, Inc. All rights reserved.
    26. 26. b-process b-process brings 11 years of Invoice Management experience in France and across the globe 130 people dedicated to e-invoicing 32K interconnected buyers and suppliers on the billManager ™platform Exchange over 40 million invoices worth over $80 billion in annual spend 24 countries where the solution is certified e-Invoicing VAT/tax compliant billManager BUYERS Legal e-Invoicing SUPPLIERS26 © 2012 Ariba, Inc. All rights reserved.
    27. 27. summary 1. Presentation of b-process 2. Supply Chain Finance, an original financing method 3. b-process’ contribution to Supply Chain Finance 4. The benefits 5. Implementation steps27 © 2012 Ariba, Inc. All rights reserved.
    28. 28. What is Reverse Factoring? RF refers to a contract whereby : - a buyer - mandates one or several banks - to pay validated invoices before their due dates - to its suppliers - on their requests RF belongs to the wider family of Supply Chain Finance services28 © 2012 Ariba, Inc. All rights reserved.
    29. 29. A buyer mandates a bank to pay validated invoices before their due dates, to its suppliers, on their requests 1 2 3 The supplier requires some or all of its The buyer notifies the On due date, the buyer validated invoices to be invoice amount that he pays the financial paid before due date by will pay on due date institution a financing institution selected by the buyer29 © 2012 Ariba, Inc. All rights reserved.
    30. 30. Reverse Factoring : whom for? Major buyers Investment grade companies Able to quickly validate invoices Their Suppliers Banks SMB with a need for working capital finance Any financial institution with an Bigger Companies eager to do some „window- interest in trade finance dressing‟30 © 2012 Ariba, Inc. All rights reserved.
    31. 31. Reverse Factoring : with which objectives? Client  Contribute to the development of his suppliers  Optimize its administrative organization  Generate additional incomes Suppliers Financial partner  Have access to a funding source easily  Limit the risk accessible to advantageous rates  Maintain margins  Consolidate relation with buyers31 © 2012 Ariba, Inc. All rights reserved.
    32. 32. Reverse Factoring : a financial mechanism that benefits all parties Savings for the supplier Part of the benefits transferred Financial costs supported by the to the buyer supplier Improved Financial costs return for supported by the supplier the bank Financial costs supported by the buyer Usual short term Reverse Factoring Usual short term buyer financing supplier financing32 © 2012 Ariba, Inc. All rights reserved.
    33. 33. summary 1. Presentation of b-process 2. Supply Chain Finance, an original financing method 3. b-process’ contribution to Supply Chain Finance 4. The benefits 5. Implementation steps33 © 2012 Ariba, Inc. All rights reserved.
    34. 34. Invoice2Cash®, the collaborative platform that the Supply Chain Finance lacked Without Invoice2Cash® With Invoice2Cash® No collaborative platform or bank-owned SaaS application that centralizes all information platform disconnected from the invoicing connected to the enrollment, implementation systems and follow up of the funding program Tedious Marketing Facilitated affiliation Information difficult to access Maximum visibility Slowed transactions Fastened information transfer34 © 2012 Ariba, Inc. All rights reserved.
    35. 35. Reverse Factoring : Maximize benefits with e-invoicing Without e-invoicing Jours 5 10 20 30 40 50 60 Days Potential financing Timeframe Time gain Jours 5 10 20 30 40 50 60 Days Potential financing Timeframe With e-invoicing35 © 2012 Ariba, Inc. All rights reserved.
    36. 36. Invoice2CASH® : Pattern 1. Invoicing data is uploaded on the Invoice2Cash platform either from your ERP or our e-invoicing tool 2. As soon as invoices are approved and the associated credit notes are taken into account, you immediately send your corresponding payment slips to Invoice2CASH® 3. The Invoice2CASH® platform calculates and presents to each affiliated supplier the amounts available for financing and the associated financial fees 4. Your suppliers freely carry out their financing requests according to their cash requirements 5. Invoice2CASH® sends the financing requirements to the third-party financial institution 6. The financial institution, after internal checks, sends the funds to the supplier 7. You pay the invoices to the financial institution at the initial due date, 8. The financial institution pays you a share of the interest charged to the suppliers in accordance to your previously negotiated conditions with him.36 © 2012 Ariba, Inc. All rights reserved.
    37. 37. Some „Invoice2Cash‟ Screenshots37 © 2012 Ariba, Inc. All rights reserved.
    38. 38. summary 1. Presentation of b-process 2. Supply Chain Finance, an original financing method 3. b-process’ contribution to Supply Chain Finance 4. The benefits 5. Implementation steps38 © 2012 Ariba, Inc. All rights reserved.
    39. 39. Why should you start a Reverse Factoring program (Buyer side benefits) ?  Secure your suppliers with no impact on your working capital  You provide them an opportunity of risk-free and cheap funding  You settle your invoices at the same date  Have a new negotiation leverage on your suppliers  You give them access to a service that few or none of their other clients can offer  Centralize and automate your payments management  You pay the financial institution on the whole  The platform handles the banking logins and prepares the payment orders  Generate additional incomes  The financier remunerates himself with the supplier at a higher rate than the one you would have  Your receive part of that extra interest perceived by the financier  Promote the deployment of e-invoicing  You increase the benefits that the suppliers can gain with your project39 © 2012 Ariba, Inc. All rights reserved.
    40. 40. summary 1. Presentation of b-process 2. Supply Chain Finance, an original financing method 3. b-process’ contribution to Supply Chain Finance 4. The benefits 5. Implementation steps40 © 2012 Ariba, Inc. All rights reserved.
    41. 41. A Supply Chain Finance program can be carriedout in a few simple steps Selection of the Segmentation Suppliers 1 Financial aspects financial of the supplier enrollment institution(s) portfolio Financing Service Framework contract 2 Legal aspects contract with b- agreement with supplier- process the financial financier institution Connection to Connection to Configuration of 3 Technical aspects the ERP the financier user access (PS & Transfer order) Support b-process : feasibility study, determining specifications41 © 2012 Ariba, Inc. All rights reserved.
    42. 42. Your contacts Sales Jean-Cyril SCHUTTERLE Business Development Director Phone : +33 (0)1 55 50 48 48 E-mail : jcschutterle@b-process.com Pre-sales Cyril BROUTIN In charge of the RF / SCF offer Phone : +33 (0)1 55 50 46 21 E-mail : cbroutin@b-process.com b-process an Ariba company 4 rue de Ventadour - 75001 Paris, France Phone: +33 (0)1 55 50 48 48 Fax: +33 (0)1 55 50 48 49 E-mail : info@b-process.com www.b-process.com42 © 2012 Ariba, Inc. All rights reserved.
    43. 43. James Tucker Global Director Solution Marketing Q&A Ariba Ariba Network & Finance Management +1.650.390.1702 jtucker@ariba.com Procure-to-Pay Network Order-to-Cash Manage Cash Better What this new Smart Invoicing infographic has to say http://www.ariba.com/solutions/manage-cash.cfm may surprise you. Take a look. Manage Cash http://www.ariba.com/pdf/SmartInvoicing-Ariba.pdf Wednesday, May 30 (14:30-15:45) Mare Nostrum F Smart Invoicing: Move Beyond Scanning to Achieve Paperless Invoice Processing Wednesday, May 30 (16:00-17:15) Mare Nostrum F The Big Finance Payoff: Top Performance Metrics and How to Achieve Them Wednesday, May 30 (17:30-18:45) Mare Nostrum F e-Invoicing VAT Compliance Workshop: A Legislative Framework for Electronic Invoices Thursday, May 31 (10:00-11:15) Llevant Managing Cash Better in an Era of Limited Growth Thursday, May 31 (11:45-1:00) Llevant Streamlining Your Accounts Receivables with Outbound Invoicing43 © 2012 Ariba, Inc. All rights reserved.
    44. 44. Share This Session…NOW…from your mobile! • All presentations are posted: Guidebook mobile app – Search Apple or Android app store for Guidebook – Enter code “collabor8” Or at Slideshare.net/Ariba • Share via email or social media **Come back soon – we are syncing #AribaLIVE audio and video interviews to the presentations**44 © 2012 Ariba, Inc. All rights reserved.

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