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Metrics, Trends & Benchmarking in A/P and FSS

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    Metrics, Trends & Benchmarking in A/P and FSS Metrics, Trends & Benchmarking in A/P and FSS Presentation Transcript

    • continyous™Metrics, Trends, and Benchmarking A/P and FSS Scot Spear Global Vice President, Sales & Marketing APEX Analytix © APEX Analytix, Inc. | www.apexanalytix.com
    • Benchmarking Key A/P Metrics  What is A/P Benchmarking?  Who has participated in the Compass Benchmark to date?  Why do it? – Value Achieved  When to do it?  Where it is done?  How to do it?Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 2
    • What is it?  The APEX Compass Benchmarking Survey is designed to provide a highly objective assessment of a Companies A/P performance, identify emerging best practices, and quantify the high standards of achievement by premier organizations in the areas of 5 Key Metrics: » A/P Infrastructure » Cash Management » Processing Efficiency » Payables Control » Risk Management  In collecting these results, we hope that you can learn from the success of the companies profiledRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 3
    • Many Benchmarks to Choose From…  APEX - Compass Benchmarking » Accounts Payable » Fraud » Procurement » Retail Post-Audit  Corporate Executive Board – Membership/Fee Based: » Peer Benchmark, Corporate Finance » Finance Budget, Staff, and Spend Benchmark  Project/Fee Based » Detailed and Comprehensive » Research, Strategy Consulting, Full Service  Custom Benchmarks » Commissioned Surveys and Market ResearchRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 4
    • Before You Benchmark…Ask  How many companies have completed this benchmark?  Are they of my size and in my industry?  Will I get the answer I am looking for from these benchmarking areas?  Is there a scoring system?  Are current best practices included? » How about future best practices?  How will I use the results? » How will I measure progress? » How does this information fit within my overall measurement strategy?  How much time will this take?  How much money will it cost? What is my expected ROI?  How will I report the results to my management team?Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 5
    • Compass Benchmarking Created more than ten years ago to fill the need for a benchmark of best practices for disbursements and risk for Fortune 500/Global 1000 Clients Demographics and Five Measurement Areas Accessible Online or as an Excel Spreadsheet Comprehensive yet easy to complete Complimentary ServiceRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 6
    • Survey ParticipantsRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 7
    • Banking, Insurance and Finance CustomersRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 8
    • Transportation CustomersRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 9
    • Retail ExperienceRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 10
    • Automotive, Aerospace/DefenseRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 11
    • Business & Consumer Goods ManufacturingRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 12
    • Business and Consumer ServicesRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 13
    • Healthcare & PharmaceuticalRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 14
    • High Tech APEX Analytix has 17 High Tech Clients including global affiliates. 9 are ranked on the Fortune 500 and 4 are ranked on the Global 1000.Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 15
    • TelecommunicationsRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 16
    • Energy and UtilitiesRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 17
    • Profile of Participants Averages Invoice Volume 3.0 Million Disbursements $11.2 Billion Non-Management FTEs 47.3 Management FTEs 6.8 Median Invoice Volume 0.6 Million Disbursements $3.5Billion Non-Management FTEs 24.0 Management FTEs 4.0 Total Participants 119Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 18
    • From the Basics …  For Accounts Payable, Shared Services needs to: » Pay the invoice accurately » On time » With strong internal controls » At a cost comparable with competitive alternatives This is the “price of admission”Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 19
    • …to Value Creation  Managed cash discount program » A financial services organization delivered $1.7 million in incremental cash discounts to their customers within 5 months  Vendor Fraud Detection/Prevention » A global services company proactively identified 2 fraudulent vendors via data analytics  Overpayment Prevention » A high tech company delivers $15-20 million per year in prevented duplicate payments  Pricing Compliance » A large, global retailer interrogates email to extract 20 million lines of pricing data, generating over $5 million in recoverable overpayments  Supplier Portal » A retailer implements portal for invoice inquiry & payment status, saving 5 FTE’s from their vendor support team This is compelling valueRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 20
    • Invoice Statistics  Cost per Invoice  Electronic Invoice Processing %  Electronic Payment Processing % Compass Benchmark, 2011Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 21
    • A/P InfrastructureRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 22
    • Processing/AutomationRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 23
    • Payables ControlsRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 24
    • Payables Controls (cont’d)Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 25
    • Risk ManagementRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 26
    • Cash ManagementRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 27
    • …to Value Creation  Managed cash discount program » A financial services organization delivered $1.7 million in incremental cash discounts to their customers within 5 months  Vendor Fraud Detection/Prevention » A global services company proactively identified 2 fraudulent vendors via data analytics  Overpayment Prevention » A high tech company delivers $15-20 million per year in prevented duplicate payments  Pricing Compliance » A large, global retailer interrogates email to extract 20 million lines of pricing data, generating over $5 million in recoverable overpayments  Supplier Portal » A retailer implements portal for invoice inquiry & payment status, saving 5 FTE’s from their vendor support team This is compelling valueRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 28
    • Cash Discount Value Streams  Capturing 100% of discounts from known vendors o Cash discounts negotiated, but not capturing timely or consistently o Early warning system to flag high dollar cash discount items o Notifying approvers to clear obstacles o Make sure terms are consistent across related vendor numbers  Capturing discounts from suppliers who offer discounts in regular course of business, but your company is not taking advantage of these discounts o Targeting suppliers with a known history of offering cash discounts (using APEX knowledge base/selected commodities)  Opportunistic, i.e., dynamic discounting o Email alerts to vendors with high value invoices communicating a cash discount opportunity o When inquiring on portal, offer “Pay Me Now!” option o “Best in Class” is $11.4 million in cash discounts/billion (over 55%!)Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 29
    • Continuous Monitoring for Overpayment Detection  Myth #1: ERP system offers duplicate controls » Reality: Global entertainment company with strong process controls and a single instance of SAP identified $14,000,000 in overpayments in a single year  Myth #2: a clean vendor master prevents duplicates » Reality: Hundreds of millions in duplicates and overpayments are found in audits of companies with supplier registration portals, strong vendor master controls, and vendor master cleansing routines.Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 30
    • Why?  Multiple company codes  Inconsistent data entry  Overrides and circumvention of system generated duplicate payment edits  Inadequate policy regarding coding of liabilities where no invoice exists  Human error  Vendor Coding Errors: Two completely different vendors paid for the same invoice  Possible Duplicate Overrides: Same invoice entered twice for payment (PO vs. non PO, override of duplicate payment edits)  Different Payment Systems: System change or multiple systems used  Inconsistent Invoice Coding: Discrepancy in the entry of an invoice number  Inconsistent Invoice Amounts: Discrepancy in the amount of the same invoice  Multiple Related Vendors: Different divisions of the same companyRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 31
    • Value of Monitoring for Duplicates 100% Increase organizational 90% accuracy 80% Improve working capital 70% Decrease business costs 60% Reduce audit fees 50% 100% Audit Fees Stop non-collectable errors Unrecoverable 40% Recoveries Real time coaching 30% 65% 45% 20% 30% 10% 0% 3-4 years 2-3 years 1-2 years Real Time PreventionRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 32
    • Daily Error Prevention Prevent Payment Errors Wrong Vendor Payments Duplicate Payments Invoice OutliersVAT, Sales & Use Tax Missed Discounts Paid Credit Memos Inconsistent CurrencyReview all invoices at the time of entry to prevent cash from being paid in errorRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 33
    • How does prevention work?*Nightly feeds are pulling only new orupdated invoices. ERP(s) Nightly Feed Vendor Invoice/Payment Daily Other exceptions systems Nightly Feed are flagged in(acquisitions) Invoice GL FirstStrike prior to Employee (VRA) 2 – 3 years of disbursement historic AP PCard Weekly Feed data is kept in FirstStrike®*PCard data is pulled from thebank showing the individualswipes of cards. Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 34
    • Vendor Risk Analysis - Service  Policy and Procedure Violations Historic Risk Activity  Conflicts of Interest  Global Prohibited Entities  Business Risk  FraudRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 35
    • Proactive Detection – Software Solution Future Continuous Controls to Monitor Fraud Risk Risk Activity Testable financial control for detecting risk Can detect issues before an invoice is keyed Can be run daily to prevent questionable payments Allows continuous monitoring of all transactions Identifies any exceptions to your financial rulesRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 36
    • FirstStrike Fraud Detect Analyze > Identify > Enable Supplier Questionable Research Prior Master File Suppliers to Payment Flag Invoices Outliers Irregularities Stop or Payments Anomalies Reverse Employee Data Conflicts ComplianceRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 37
    • Monitoring for Correct Pricing & PaymentRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 38
    • Which organization does your CFO believe is ensuring that the actual price paid is in compliance with the negotiated “should be” price? Accounts Payable/Finance Procurement Contract Compliance Group User Department Receiving the Good/Service Other 25% 18.8% 18.8% 37.5% 0% From data gathered at Top Gun – 10/25/2010 n=16Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 39
    • % of Contract Data in Repository 11.3% 3.8% > 90% 15.1% > 75% - 90% > 50% - 75% 62.3% > 25% - 50% < 25% 7.6% From data gathered at IQPC Shared Services Conference – 3/2011 n = 53Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 40
    • Vendor Portal EnablementRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 41
    • Adoption and Use of Portals No plans 8% Implemented May consider 25% 14% Strongly considering In the process of 29% implementing 24% From data gathered at IQPC Shared Services Conference – 3/2011Recover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 42
    • Global companies have implemented or are in the process of implementing these portal functions 1. Invoicing and Payment Inquiry 29% 2. Supplier Registration 17% 3. Vendor Vetting 16% 4. Vendor Performance Scorecard 6% 5. Vendor Satisfaction 4% 6. Invoice Submission 18% 7. Dynamic Discounting 10% From Elite conference in Prague; N=22 companiesRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 43
    • Contact Me Scot Spear, Global Vice President, Sales & Marketing sspear@apexanalytix.com Visit our APEX Expert website, dedicated to best practices sharing: http://www.apexanalytix.com/apex-expert/default.aspxRecover. Prevent. Improve. Proprietary and Confidential © APEX Analytix, Inc. www.apexanalytix.com 44