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Finance & Accounting

58 Posts authored by: Chris Rauen

E--invoicing initiatives typically focus on how you can eliminate paper and reduce processing costs. But what happens when you extend e-invoicing capabilities to drive compliance to preferred suppliers and negotiated prices?

 

 

Here are a few benefits that you can expect: 

 

 

- Elimination of overpayments

- Driving compliance to approved vendors and products

- Improving accuracy of cash flow and accruals forecasts

- Reducing the time spent tracking invoice inquiries

 

 

Sound too good to be true? Don't take my word for it. Come hear how security company ADT is applying its Six Sigma expertise to transform its Procure-to-Pay operations at Ariba LIVE, May 17-19, in Las Vegas. In the session, AP as Chief Compliance Officer: How E-Invoicing Can Improve Compliance and Close the Loop on Procure-to-Pay Savings, you will hear how ADT is using e-invoicing as a foundation to improve invoice-contract match rates and gain more control over spend.

 

 

This presentation is part of a complete agenda of breakout sessions, keynote addresses, and network opportunities where you can learn how to buy, sell, and manage cash, set in the grandeur of The Cosmopolitan Hotel.

 

 

So join us and learn how you can transform your AP operations and drive better alignment between procurement and AP.

 

 

How effective are you at automating your invoice management process?

 

For GAF, the largest roofing manufacturer in North America, a first attempt at invoice automation drove touchless processing to just 8 percent of all invoices, and pushed problem invoices to procurement for resolution.

 

Today, with Ariba, GAF has enabled an integrated PO and invoice automation solution that enables high rates of touchless invoice processing, freeing procurement to focus on more strategic activities. GAF is also driving more  purchases off catalogs to enforce compliance, maximizing spend with key suppliers to lower costs and, in the next wave, extending the initiative to direct materials spend.


It's a great story that will be told at Ariba LIVE, set for March 17 to 19 in Las Vegas. In this breakout session, you will hear from GAF procure-to-pay experts discuss the business impact from PO and invoice automation, and get ideas on how you can achieve similar results.


This presentation is part of a comprehensive agenda that features keynote presentations, nearly 70 breakout sessions, pre-conference training, and opportunities to network with your peers to gain valuable insight in how you can improve invoice management and transform your procure-to-pay eoperations.

 

So join us at the Cosmopolitan Hotel and learn how you can improve the way you buy, sell, and manage cash in a networked economy--enabling the business of tomorrow... today.

Many organizations are leveraging the Ariba Network for PO invoicing to improve efficiency and enforce compliance. PO-Flip®, an innovation from Ariba that earned the company a registered trademark, is a proven solution embraced by many buyers and suppliers on the Ariba Network to achieve those objectives.

 

Now, more organizations are looking for ways to get the same level of process efficiency and compliance with non-PO invoices, and contract invoicing is serving that need. With Ariba contract invoicing, you can enforce compliance to a contract by enabling invoicing from contracts and automatically matching invoices to contracts. Ariba contract invoicing also provides automated account coding.

 

In recognition of the business impact of this e-invoice innovation, Ariba last week received the "Technology Excellence Award" from PayStream Advisors, a leading independent research and advisory firm that examines trends and strategies on the automation of back-office financial operations such as accounts payable, accounts receivable and and treasury. Henry Ijams, PayStream Advisors founder and managing director, cited the ability of Ariba contract invoicing to prevent contract leakage as a valuable feature that can deliver substantial cost savings.

 

To hear how Ariba customers are getting results today with contract invoicing, you can access the recording of the contract invoicing session at Ariba LIVE 2013.

Let’s face it: paper invoices wreak havoc in accounts payable.  They take too long to process, often contain errors that increase processing costs and cycle times, and hinder productivity.  Get rid of the paper, and you can solve these problems.

 

That’s where Ariba can help.

 

With Ariba touchless invoice automation, your AP staff spends less time tracking down paper invoices, resolving invoice errors, and responding to supplier inquiries about when they will get paid.  A supplier portal lets suppliers handle all the dirty work: automatically “flipping” purchase orders into invoices and submitting them electronically as a “perfect payable”; correcting invoice errors immediately upon submission, not days or weeks after the fact; seeing real-time status of when they will get paid; and more.

 

With touchless invoice automation, AP productivity soars, with invoices processed per full-time equivalent (FTE) rising from less than 10,000 invoices a year to 40,000 invoices/year or more. That leaves more time for higher value activities such as supporting procurement efforts to enforce supplier compliance to your preferred invoice process, and identifying early payment discount opportunities.

 

To learn more about invoice automation and the results that customers are achieving today, join us for a webinar hosted by IOFM on Tuesday, Feb. 12, 2pm EST/11am PST. You will hear how Maxim Healthcare Systems has automated the “buy” and the “pay” sides of procure-to-pay to lower its invoice processing costs, improve compliance, and gain better control over spend.

At the PayStream Advisors "Fast Track to Purchase to Pay Automation" Summit, held Sept. 17-19 in Charlotte, NC, Ariba received the Technology Excellence Award as the Leading P2P Technology in 2012. Judges on the PayStream P2P Advisory Board reviewed submissions and made their recommendations based upon solution features and customer results. Ariba's award was handed out at the day one luncheon by Henry Ijams, founder and managing director of PayStream Advisors.

 

This recognition reflects the value that Ariba delivers to organizations looking to streamline their P2P processes for business advantage. The return on investment from Ariba comes from several areas: operational cost savings; improved compliance to contracts, preferred suppliers and negotiated prices; expansion of early payment discounts; and the ability for buyers and suppliers to better manage working capital.

 

To hear Henry Ijams discuss the return on invesment from Ariba, listen to his comments from Ariba Live earlier this year:

 

 

Thanks to Henry Ijams and the PayStream Advisors team and advisory board for this award. And thanks to Ariba customers, and Ariba team members, for their contribution to this recognition.

In a recent Purchase Order Practice Survey, conducted by The Accounts Payable Network, the word "best" would not describe the practices followed by many organizations.

Here's a sample of the findings:

  • 53 percent of respondents indicated some level of non-compliance.
  • If a buyer ignored policy and placed an order without a PO, 44 percent stated that they would pay the invoice without the PO, while nearly 60 percent would require the buyer to create a PO after-the-fact.
  • Average percent of invoices put on hold or blocked was 21, with 30 percent blocked or on hold for the lower quartile. That compares to 5 percent blocked or on hold for the upper quartile.
  • The most common exceptions involve the invoice price not matching the PO price.
  • 44 percent of organizations take 7 days or longer to resolve invoice exceptions.

There's quite a gap in the hold-blocked invoice rate differential between leaders and laggards: 25 percent more problem invoices for the lower quartile performers compared to the upper quartile. For every 100,000 invoices processed, the laggards deal with 30,000 problem invoices, the leaders only 5,000. If it takes $20 on average to resolve a hold or blocked invoice, the laggards spend an additional $600,000 to process these invoices vs. $100,000 for the leaders. At $30 per problem invoice, the numbers jump to $900,000 vs $150,000 respectively. And for the  organization processing 500,000 invoices annually? Multiply those estimates by 5.

 

These costs don't consider whether the purchase was from a preferred supplier, at a negotiated price. Hackett Group studies show that the savings leakage from non-compliance--or buying from a non-preferred supplier off the contracted rate--is over $9 million per billion dollars of spend for the average company. Then there are the lost savings from the inability to capture early payment discounts.

 

If you are having a difficult time building a business case for automating your invoice or procure-to-pay operations, run the numbers. You really can't afford not to.

Preventing bad invoices from posting to your AP or ERP system for processing is among the greatest challenges facing accounts payable. Manually resolving problem invoices consumes too much time, and drives up invoice processing costs. Plus the processing delays can prevent the capture of early payment discounts, an important metric for AP performance.

 

So how can you catch more errors and exceptions up front in the process, and drive up touchless processing rates?

 

Applying business rules at the front end of the process for invoice validation/matching is key; it's what we refer to at Ariba as smart invoicing. But today many solutions claim to validate invoices before posting for payment; so you must understand the true capabilities of the solution you choose. 

 

Here are two questions that you should ask when looking to automate your invoice process to prevent errors and exceptions.

 

What is the process for invoice validation? Simply detecting an empty invoice field or a wrong data format on an invoice will prevent some errors, but will allow many others through. You want a solution that can provide a table of PO detail validation of any sort for PO invoices; and, for non-PO invoices, the ability to mandate requester names with email addresses together with electronic workflow for quickly routing these invoices for cost coding and approval.

 

What percentage of invoice matching and validation will occur in the AP or ERP system? Simple validation like header PO validation for valid and open POs or a defined field value will make your back end systems work overtime to handle the real matching and validation. And this will require AP, procurement and supplier involvement and time to correct.

 

What are your straight-through invoice processing rates, and what steps are you taking to driving them higher? I'd welcome your comments on this important topic for AP professionals.

 

 

On our webinar last week with Ardent Partners, "The Hunt for Safe, Short-Term Cash Yield," invoice exceptions were a topic of discussion. According to Ardent Partners research, best-in-class companies still have errors on 7.6% of their invoices, compared to the average of 14% of invoices with errors for the average company. An AberdeenGroup report showed invoice errors to be a problem for a much larger percentage of total invoices: a 12% exception rate for best-in-class companies, and whopping 30% exception rate for laggards.

 

Costs to resolve invoice exceptions are all over the map, with $20 being a conservative estimate. If you fall into the 30% exception group, at $20 extra cost per invoice to process, that's $600,000 in extra effort for every 100,000 invoices your process. If that cost jumps to $40/invoice to resolve, that's $1.2 million per 100,000 invoices. Ouch.

 

Do you know what percentage of your invoices contain errors, and the cost to fix them? Do you track problem invoices by invoice type, or supplier groups?

 

I welcome your comments and feedback. 

How much time do you spend in accounts payable responding to supplier calls about invoice status? In his presentation at Ariba Live, Jeff Phillips of UPS mentioned that invoices would often disappear into the "big black hole of our ERP system." No one knew what was going on.

 

Today, UPS takes a smart invoicing approach, extending its ERP system with Ariba to collaborate with suppliers of all sizes for invoice processing. Suppliers don't call UPS about invoice status; they can see for themselves via a self-service portal. But that's not all. To hear about the other benefits of smart invoicing, for UPS and its suppliers, check out this video.

 

Ariba Live featured presentations from finance leaders at world-class organizations discussing how electronic invoicing with Ariba is helping to eliminate paper, invoice exceptions and supplier inquiries; lower processing costs; and manage cash better.

 

If you missed these presentations, you can hear interviews with these experts and others at: www.ariba.com/smartinvoicing.

 

If you would like to simply browse through all presentations that are available, you can find them here:  Ariba LIVE 2012

 

For other post-session Ariba Live interviews captured on video, you can visit our YouTube channel, where you will find the interviews, clips from main stage, and more. We will be updating and adding even more videos over the next two weeks.

 

If you attended Ariba Live, I'd love to hear from you. Let me know what sessions or programs you found most valuable, and what you would like to see in next year's event, to be held May 6-9 in Washington, D.C.

Hard to believe a week has passed since Ariba Live. The interest from everyone - buyers, suppliers, partners and others - about business commerce collaboration was evident throughout the conference.

 

With such a broad agenda, it was difficult for attendees to fit into their schedules all the sessions they wanted to attend. For those of you who may have missed the smart invoicing session, here is a link to the presentation. Geoff Brown from Liberty Mutual and Jeff Phillips from UPS discussed their invoice processing challenges, and the results they achieved by taking a smart invoicing approach.

 

For a complete list of Ariba Live presentations, click here.

Are you looking to move beyond scanning and optical character recognition (OCR) and eliminate paper invoices altogether? Provide your suppliers with a self-service portal that eliminates phone calls to AP? Capture all available early payment discounts, and generate new, dynamic discounts from suppliers that never offered them before?

 

These are just a few of the issues that will be discussed at Ariba Live, April 10-12,in Las Vegas. Join corporate finance leaders from GlaxoSmithKline, Liberty Mutual, UPS, The Walt Disney Company, ONEOK, and other world-class organizations as they discuss strategies and best practices for automating accounts payable. Network with your peers. Discuss business trends with industry analysts. Learn about the technology, community, and capabilities that are making business commerce as easy as consumer commerce.

 

For more information, or to register, visit www.aribalive.com

For top performing organizations such as GlaxoSmithKline, Liberty Mutual, UPS, The Walt Disney Company, Flint Hills Resources, and ONEOK, accounts payable is a strategic business function that is helping to manage cash better.

 

How did these organizations transform their AP function for business advantage?

 

You can hear their stories at Ariba Live, April 10-12 in Las Vegas. This is the premier event for corporate finance professionals looking to streamline accounts payable operations and optimize their working capital.

 

Here are some of the topics that will be featured in session presentations at Ariba Live:

 

  • How Smart Invoicing Enables Straight-Through Processing for All Your Suppliers
  • Winning Supplier Enablement Strategies
  • The Big Payoff: Top Payables Performance Metrics... and How To Achieve Them
  • Dynamic Discounting: New Opportunities for No-Risk, High Yield Cash Returns
  • The Collaboration Imperative: Extending Back Office Systems to Automate All Spend

 

For more information, or to register, visit www.aribalive.com

Join us at Ariba Live, April 10-12, Caesars Palace, and learn about smart invoicing, dynamic discounting, supplier enablement, payables performance measurement, and more, from finance leaders at Flint Hills Resources, Dollar Tree, UPS, Liberty Mutual, Republic Services, and GlaxoSmithKline to name a few.

 

If you are responsible for improving accounts payable performance, or would like to be, this is the one event you should attend this year.

 

To learn more, or to register, visit www.aribalive.com

AP professionals... you can help your company earn higher annual returns on cash than Warren Buffett. How? Through early payment discounts.

 

Don't take my word for it. Attend our webinar this Thursday, 2pm EDT - 11am PDT, featuring Republic Services, who will discuss how they are earning double-digit annual returns from early payment discounts.

 

For more information or to register, click here

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