Accounts Payable: Best-in-Class Strategies for Reducing Invoice Processing Costs and Time (2010)

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This webinar highlights findings from the Invoicing and Workflow benchmark study and unveils a core set of recommendations that follow Aberdeen's unique Best-in-Class Maturity Framework, which details …

This webinar highlights findings from the Invoicing and Workflow benchmark study and unveils a core set of recommendations that follow Aberdeen's unique Best-in-Class Maturity Framework, which details the specific strategies, capabilities and technology solutions leveraged by top-performing enterprises to drive down the costs and cycle time associated with invoice-processing.

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  • 1. Accounts Payable: Best-in-ClassStrategies for Reducing InvoiceProcessing Costs and TimeChristopher DwyerResearch Analyst, Aberdeen GroupNasreen QuibriaSenior Analyst, Aberdeen GroupGreg CollinsRelationship Manager, Esker USA
  • 2. Agenda Introduction and Research Background Research Findings Best-in-Class A/P Strategies and Performance Recommendations for Action 2
  • 3. Speaker Introduction Christopher Dwyer Research Analyst, Aberdeen GroupChristopher Dwyer is a research analyst in Aberdeens Global SupplyManagement practice. He has extensive writing, editing and researchexperience. He has contributed to and led research efforts focused oncomplex categories, such as contingent labor, print management, andT&E, as well as driven benchmark studies centered on the procure-to-pay process. In 2009, in addition to leading Aberdeens contingent laborresearch, he has also co-led the Global Supply Management’s teamcoverage in the areas of accounts payable (e-payables) and spendanalysis. 3
  • 4. Speaker Introduction Nasreen Quibria Senior Analyst, Aberdeen GroupNasreen Quibria is a Senior Analyst at Aberdeen Group. Nasreen’s research spansthe financial value chain, including topics from e-payables, treasury andpayments, financial and operational risk management, to financial planning,budgeting, and forecasting, and working capital management. Before joiningAberdeen Group, she was Director of Payments at the Association for FinancialProfessionals (AFP). Nasreen has a track record of leading successful initiatives infinancial services and technology industries. Nasreen was a key architect of theFederal Reserve Bank of Boston’s Emerging Payments Research Group (EPRG).Prior to the Fed, she was Director of Product Development and Management atEliza Corporation where she played a pivotal role in transforming a start-upcompany to a profitable business. Nasreen holds a B.A. in economics fromWellesley College and an M.B.A. from Boston College. 4
  • 5. Aberdeen’s History of e-Payables Research 2010 Invoicing and Workflow (April 2010) E-Payables: A/P Rising (September 2009) E-Payables: Electronic Payments (July 2009) 2009 E-Payables: Invoice Receipt and Workflow (May 2009) E-Payables: A/P Strategies for Success (September 2008) E-Payables: Electronic Payments and Fraud Prevention (June 2008) 2008 E-Payables: Invoice Receipt and Workflow (March 2008) E-Payables: Solution Selection Guide (September 2007) E-Payables: Accounts Payable Automation (March 2007) 2007 2006 Accounts Payable: Strategies for Success (December 2006) 5
  • 6. Aberdeen’s Research o Aberdeen PACE ModelMethodology  Pressures  Actions  Capabilities  Enablers o Strategies and Tactics o KPIs – Usage and Specifics o Follow-up Surveys interviews 6
  • 7. Agenda Introduction and Research Background Research Findings Best-in-Class A/P Strategies and Performance Recommendations for Action 7
  • 8. Survey Profile Company Size Job Titles General Manager / Other Staff EVP / SVP / VP Small Large(less than $50 (over $1 billion) million) 14% 21% C-Level 23% Executive 14% 42% 31% 20% 35% Manager Director Midsize ($50 million to $1 billion Survey of 152 companies worldwide 8
  • 9. Top Pressures Driving Companies to Focus on A/PLack of visibility into invoices / 57% A/P document Corporate directive to lower invoice processing costs 43% Need for better cash 29% management Difficulty managing archives 23% of paper-based invoicesNeed to reduce risk of fraud / 15% abuse Source: AberdeenGroup Lack of visibility is a top concern of businesses… 9
  • 10. The Visibility Factor 5% 15% No visibility 48% Real-time Good visibility Limited visibility 32% Source: AberdeenGroup Over half of companies have limited to no visibility into A/P processes 10
  • 11. Top Strategic Actions to Improve A/PAutomate invoicing processes 62% Integrate e-payables with 31% other systems Centralize A/P processes 29% Standardize IR&W processes 27% Conduct internal assessment of current A/P capabilities 27% Source: AberdeenGroup Companies are automating invoice processes 11
  • 12. Centralization of Core A/P Functions Payment 79% Reconciliation 49% PO Issuance 45% Scanning 36% Indexing 35% Approval 34% Receipt 30% Source: AberdeenGroup Receipt and approval are the least centralized and biggest bottlenecks 12
  • 13. Impediments to A/P Improvement Lack of internal support 39% for change Difficulty with integrating 37% A/P and other systems Non-standard nature / multiple 33% formats of invoices Lack of automation of 23%exception / discrepancy handling Securing executive support for A/P transformation 21% Source: AberdeenGroup 13
  • 14. Agenda Introduction and Research Background Research Findings Best-in-Class A/P Strategies and Performance Recommendations for Action 14
  • 15. Maturity Class Definitions Definition of Mean Class Performance Maturity Class Best-in-Class: Top 20% $4.84 cost to process a single invoice of aggregate 3.7-day cycle time to process a single invoice performance scorers Industry Average: Middle 50% $18.27 cost to process a single invoice of aggregate 14.2-day cycle time to process a single invoice performance scorers Laggard: Bottom 30% $25.83 cost to process a single invoice of aggregate 41.3-day cycle time to process a single invoice performance scorers Source: AberdeenGroup 15
  • 16. Best-in-Class A/P Capabilities Best-in-Class All Others Clear policies for invoice 59% receipt-to-payment workflow 35%Quick retrieval of invoice images 50% 40% Standardized invoice receipt / 50% workflow processes 38%Enterprise-level visibility into A/P 48% 40%Complete audit trails on demand 46% 29% Executive support for invoice 46% receipt / workflow automation 29% Source: AberdeenGroup 16
  • 17. Best-in-Class Technology UtilizationAutomated invoice receipt / 52% workflow system 29% Spend analysis 42% 23% EIPP 32% 7% Supplier portals 30% 14% Best-in-Class Digital signatures 24% All Others 20% Supplier networks 24% 15% Source: AberdeenGroup 17
  • 18. Business Case for A/P Automation Definition of Maturity Class Best-in-Class All OthersNumber of invoices processed per month 14,080 9,409Value of invoices processed per month $67.8m $45.9mPercent of invoices that are PO-based 63% 62%Invoice processing cost (single) $4.84 $20.13Annual invoice processing cost $817,644 $2,273,076Annualized benefit of Best-in-Class n/a $1,726,656performancePayments receiving early payment discount 8.8% 6.0%Annualized impact of 1% gain in early $164,795 $110,051payment discount capture (at 2/10 net 30) Source: AberdeenGroup 18
  • 19. Agenda Introduction and Research Background Research Findings Best-in-Class A/P Strategies and Performance Recommendations for Action 19
  • 20. Why Does A/P Automation Matter in 2010?  Visibility, visibility, visibility  Standardization of internal processes  Leads cost containment efforts  Link to other functional areas  Spend intelligence Source: AberdeenGroup 20
  • 21. Recommendations for Action  Review current receipt and approval policies and identify major program gaps Source: AberdeenGroup 21
  • 22. Recommendations for Action  Review current receipt and approval policies and identify major program gaps  Look to automation as a means of not only improving A/P processes, but also catapulting this function to a strategic level Source: AberdeenGroup 22
  • 23. Recommendations for Action  Review current receipt and approval policies and identify major program gaps  Look to automation as a means of not only improving A/P processes, but also catapulting this function to a strategic level  Close the loop with data integration Source: AberdeenGroup 23
  • 24. Recommendations for Action  Review current receipt and approval policies and identify major program gaps  Look to automation as a means of not only improving A/P processes, but also catapulting this function to a strategic level  Close the loop with data integration  Utilize the A/P function to drive spend visibility Source: AberdeenGroup 24
  • 25. They Quit Paper & SoftwareEsker is a recognized leader in helping organizations eliminate paperand improve business processes with on premise and on demanddocument automation solutions. Specializing in the Cash ConversionCycle, Esker helps organizations automate sales orders, accountsreceivables, purchasing, and accounts payable from end to end drivingproductivity, efficiencies, and profits.Esker Highlights  Order to Cash and Procure to Pay market leader  22 years of field experience, 240 employees  More than 2.5 million users  3,000+ SaaS customers world wide They Quit Paper  80,000+ document management servers installed world wide  Over 3 billion pages processed each year  25% of Esker’s employees are dedicated to product developmentEsker Awards and Accolades Included in “Cool Vendors in Knowledge Support,” by Gartner. 2005 Codie Awards Finalist for “Best Document Management Product or Service” “Esker does the best job at linking capture with DOM. It considers capture as important as creation and delivery and brings these together to address pain points in sales order processing and invoice management.” Patented received for Esker DeliveryWare Rules Engine 25
  • 26. Why SaaS Makes Sense for AP 1. Capital vs. Operational  AP is a “non-revenue generating function”  Lowers up-front investments (brings Enterprise solutions to SMB)  Ability to execute an automation initiative with minimal IT support 2. Decentralized / Distributed Processes  Scan and enter invoices remotely  Expand approval workflow to all company locations  Securely  With audit trail  No additional ERP licenses required 3. Control & Visibility  Overcoming the Catch 22  Additional headcount  BPO – business process outsourcing 26
  • 27. Stages of AP Automation Package A: Paper based - Invoice archiving and indexing Package B: Imaging Enabled - OCR functionality Package C: Touch-less AP - Payment approval workflow 27
  • 28. Thank You! Steve Smith Vice President of Sales Americas For more information on Tel Fax 608-828-6110 608-828-0100 Greg Collins Accounts Payable Automation, steve.smith@esker.com Sales Manager, Americas please visit Tel § 608.828.6000 Fax § 608.828.1000 http://www.apondemand.com info@esker.com OR Call us at 1-800-368-5283 Esker, Inc. § 1212 Deming Way § Suite 350 § Madison, WI 53717 28
  • 29. Q&A and Contact Info Christopher Dwyer, Research Analyst Global Supply Management, AberdeenGroup chris.dwyer@aberdeen.com 617.854.5280 Nasreen Quibria, Senior Analyst Financial Management and GRC, AberdeenGroup nasreen.quibria@aberdeen.com 617.854.5379 For More Research Please Visit: www.aberdeen.com 29