Are invoice exceptions the bane of your accounts payable department? Then you need to replace paper invoicing with e-invoicing to virtually eliminate them and achieve close to 100 percent touchless invoice processing.

 

To learn more about how you can effectively consolidate the electronic processing of PO and non-PO invoices, join us on Thursday, December 8, 11:30am EST, for a webinar featuring Tom Bohn, president/CEO of the Institute of Financial Operations. Click here for more information.

As organizations recognize the value of invoice automation to drive efficiencies and lower costs, many discover that a narrow scope can limit the potential benefits.  

Ariba is sponsoring a white paper that examines why organizations have only limited success automating parts of the invoice process without fixing the whole. Taking a myopic approach can lead to the following problems:

High costs in account payable from handling exceptions and manual approvals;
High costs in procurement dealing with invoices that AP pushes to them for exception management and error handling;
Failure to record liabilities in the correct accounting month;
Over-spent budgets, improper coding of future invoices.

What are some of your major challenges in invoice processing? Share them with me and I will make sure that we address them in the upcoming report.

Chris Rauen

Does Your CFO Talk Tech?

Posted by Chris Rauen Nov 15, 2011

More CFOs recognize the business advantage of a networked enterprise. As a result, they are becoming more involved in decisions about technology, according to a Robert Half Management survey published by Proformative.

 

In assessing the results of the survey, an executive from Robert Half Management stated, "Finance executives increasingly view enhanced information technology capabilities as a route for the enterprise to achieve efficiencies and boost productivity."

 

E-invoicing is one area where the productivity breakthroughs are considerable. There are other reasons, however, why CFOs and finance executives should be drivers of e-invoicing initiatives: the impact on working capital. Often overlooked in an invoice automation initiative is the ability to better manage cash through dynamic discounting.

 

In the old world of the manual processing of paper invoices, a supplier either offered a discount, or they didn't; and you took the discount within the defined discount period (for example, by day 10 in a 2% 10 net 30 payment term) or you missed it.

 

A business commerce network introduces a new world of collaborative finance. Prorated discount terms enable discount capture after the discount due date on a sliding scale; for example, a “2%10 net 30 prorated” discount gives you a two percent discount for paying within 10 days of the invoice date, or a prorated discount rate over the remaining days. Dynamic discounting lets suppliers control the acceleration of payment on approved net term invoices (e.g., net 60) on an ad-hoc basis in exchange for a discount. Ariba Discount Professional, for example, can automatically present discount offers to suppliers whenever an invoice from a particular supplier or group of suppliers is approved. At that point, the supplier can choose to accelerate payment simply by clicking a button. The Ariba Cash Flow Optimizer™ feature lets suppliers rapidly determine cash flow needs, identify invoices that qualify for early payment discounts, and then select those they wish to accept.

 

In today's uncertain economic environment, collaborative finance management offers a significant business advantage for buyers and sellers. If this would be news to your CFO, you should break it to him today.

Organizations looking to extend scanning – Optical Character Recognition (OCR) solutions from document management to invoice management often run up against roadblocks.  For NSG Group, the obstacle was limited straight-through processing, as NSG could only achieve 20% touchless invoice processing with its scanning – OCR system.

 

If you have adapted or implemented a scanning – OCR for invoice processing, I’d like to learn what are some of the greatest challenges you face when processing invoices. Click here to take the poll.

While legacy Optical Character Recognition (OCR) systems have improved their ability to capture data, the application to complex, unstructured documents such as an invoice can pose problems that lead to duplicate payments.

 

A better option is to avoid data entry error risk altogether and move to electronic invoicing. Ariba PO-Flip (R) is an example of an e-invoicing feature that automatically validates an invoice from the PO to promote touchless invoice processing. For non-PO invoicing, the ability to configure business rules in the Ariba Network can provide the same level of invoice processing efficiency and effectiveness.

 

Electronic workflow is another feature of many e-invoicing networks. While standalone scanning/OCR solutions often come with workflow to facilitate invoice approval, this workflow often is restricted to the routing of invoice exceptions to fix errors, and requires specialists to handle the value-added business tasks such as account coding. For true invoice automation, electronic workflow must address both the exception handling that is largely AP’s responsibility, and the business process workflow for automatically applying account codes, validating VAT and other taxes, and performing sophisticated invoice matching with a PO, goods receipt, and contract. With this level of smart invoice functionality, you can achieve close to 100 percent touchless processing, and drive invoice processing productivity rates to 50,000 invoices per FTE and higher.

 

 

 

 

For more tips on how you can achieve greater invoice processing efficiency, we have published a white paper, "Beyond Scanning: Moving Toward 100 Percent Paperless Invoice Processing." To request a copy, simply send me an email at crauen@ariba.com

At last week's SharedServicesLink Finance Shared Services & Outsourcing Summit in Dallas, attendees voiced their concerns about inefficient invoice processing. Here's a sample of the challenges that many Shared Services organizations face:

 

"All paper invoices. Manual data entry. Too many blocked invoices."

 

"Moving ahead with EDI, but the going is slow, with a handful of connections."


"We've outsourced the scanning of paper invoices, but have a high exception rates from too much paper."

 

"Totally manual process, limited PO usage, many small local suppliers, 21 days to approve an invoice."


"50% EDI, but still have 25,000 paper invoices each month."

 

"We have a scanning and workflow solution, but still have to touch every invoice manually."

 

Any of these sound familiar to you? 

It's no wonder that electronic invoicing has become a major initiative within Shared Services organizations, even for those that have outsourced the invoice management process. E-invoicing eliminates the problems of paper invoices, from processing delays, data entry errors, supplier inquiry calls, and lost discounts.

 

E-invoicing's future is the subject of next month's webinar, "The Forces Affecting E-Invoicing's Future." I hope you can join us on November 15, 10am EST, for the latest in our Best Practice webinar series.

 

And if you plan to attend this week's IOFM Accounts Payable Conference & Expo in Las Vegas, visit our booth or attend our Thursday afternoon session on benchmarking and performance measurement.

The first round of Major League Baseball playoffs concludes tonight, and no team so far has lost a last-inning

lead. Or to borrow the term used in baseball circles, blown a save.

 

How can you avoid blowing a save in accounts payable?

 

To stay ahead of the pack, you must get rid of paper invoices and automate manual processes. Here are some other

things to consider.

 

Choose a smart invoicing approach to invoice processing that eliminates errors at the source. That means choosing an

e-invoicing solution that doesn't just pass any invoice to AP, but passes only valid invoices through AP.

 

Benefit from new, collaborative finance capabilities such as dynamic and sliding scale discounts. You pay less for

goods and services, increase annual returns on your short-term cash, and help your suppliers improve their cash

flow.

 

Finally, assess the value to suppliers of your e-invoicing network. Business networks that provide value only to

buyers discourage supplier participation. Two-sided networks such as Ariba's deliver value to buyers and suppliers,

and provide an e-commerce channel that leads to new business opportunities for both trading partners.

 

You can learn more about trends in e-invoicing and business commerce networks at IOFM's 10th Annual Accounts Payable

Conference and Expo, October 19-21, in Las Vegas. Hope to see you there. 

Scanning/OCR is sometimes a first step for organizations looking to automate invoice processing. At NSG Group, one of the world's leading manufacturers of glass and glazing systems, achieving only 20% touchless processing with its scanning/OCR system did not justify a broad rollout.

 

Instead, NSG Group moved beyond scanning/OCR with Ariba e-invoicing, where the PO-Flip (R) service functionality allows suppliers to "flip" POs into invoices. By automatically matching the order to the invoice, this smart invoicing approach helps drive straight-through processing rates of 90%+.

 

“Smart invoicing is really the key,” said Jonathan Fallows, NSG P2P Finance Manager. “We don’t want to just receive invoices; we want them to flow through AP in a touchless process, requiring no interaction with our AP team.”

 

The ability to support global e-invoicing, and the compliance requirements that differ by country, were other requirements that Jonathan cited for an efficient and effective global e-invoice process.

 

To hear the complete story, listen to the webinar recording: How e-invoicing helped NSG align finance and procurement, and take PO compliance from 50% to 90%

What is H-I-P?

 

When it comes to e-invoicing, it's the following:

 

High performance: Driving AP productivity from managing fewer than 10,000 invoices per year to 40,000 invoices per year, or more. In addition, the role of your AP staff shifts from low-value data entry, error-checking, and responding to supplier inquiry calls to more strategic activities, such as identifying opportunities for expanding early payment discounts. And that takes us to...

 

Interest on cash. With current rates of return on short-term cash at historic lows, the double-digit returns from early payment discounts look extremely attractive. As e-invoicing compresses the invoice review and approval cycle to a few days, you can capture early payment discounts on virtually all invoices that offer them. And with an innovation in collaborative finance management -- dynamic discounting -- you can extend discount opportunities to any approved invoices, on a sliding scale up to the due date of the invoice.

 

And finally... the Perfect Payable. With Ariba's PO-Flip(R) service functionality, you can automatically convert electronic purchase orders into e-invoices that are error free and an exact match to the purchase order. Or you can match non-PO invoices to contracts and ensure compliance with negotiated prices on goods and services from your preferred suppliers. Ariba supports matching of non-PO invoices against distinct service/material items (with advanced tier and formula pricing attributes), recurring fees/payments, contract milestones, or by time and materials.

 

So get H-I-P with e-invoicing and turn your AP organization into a tower of processing power. To learn more, join us this Thursday, Sept. 22, at 2pm EDT / 11am PDT for a free webinar,  Build Your Business Case for Procure-to-Pay Automation, featuring The Hackett Group.

"If you aren't living on the edge, you're taking up too much room."

 

This quote caught my attention the other day. I can't recall the source. But as I interpret it for the accounts payable function, it means that those who refuse to transform the accounts payable function may be consuming too much overhead.

 

The cost differential for low performing AP organizations and high performers is startling. One metric commonly used is annual number of invoices processed per FTE. Low performers are below 10,000. Top performers are north of 40,000.

 

Where do you fall?

 

There are so many useful metrics that you can use to guide an initiative to improve the AP function. For those interested in learning more about them, this month's webinar is for you.

 

We're pleased to be featuring Kurt Albertson from The Hackett Group on our September 22 webinar: Build Your Business Case for Procure-to-Pay Automation. Be sure to join us on Thursday, September 22, 2pm EDT / 11am PDT.

 

For more information about the webinar or to register, simply click on the link above. If there are certain metrics that you have found valuable, or would like to learn more about, please let me know.

One of my favorite TV series of the 1990s was "Tool Time," starring Tim Allen. I share his knack for wreaking havoc on just about anything I tackle with a hammer, wrench or drill.

 

A recent example: a clogged bath tub drain. I started with a plunger, added a vinegar-baking soda blend for back up, and then launched a final vigorous assault with a plumber's snake, which could only descend a few inches down. The  fruits of my labor were some small strands of hair. The drain remained clogged. I phoned my neighbor, a home improvement guru, who suggested a simple fix. The drain cleared after I flipped the metal lever that opened it.

 

Aren't many of you having the same problem struggling to push paper invoices through your organization? You can only throw so many people at the problem. And if your staff is consumed with data entry, account coding, tracking invoice errors, or responding to supplier phone calls about invoice status, you're not only wasting time, but a lot of money.

 

Moving from paper processing to electronic processing of invoices is much like opening the drain plug on that bath tub. The invoices flow through quickly, invoice errors are eliminated, and AP productivity soars.

 

Want to learn more about the business value of e-invoicing? Come hear Jeff Halper, director of procurement, Maxim Healthcare, discuss his path to paperless invoice processing at PayStream Advisor's Expedition to P2P Conference in Kansas City, September 19-21.

 

For a preview of what Jeff will have to say, click here.

 

Hope to see you in Kansas City (without my plumbing tools).

As an early adopter of EDI, GSK North America was able to convert large suppliers to an e-invoicing process. But that still left nearly 50% of its invoice volume on paper.

 

Al Barbee, director of North America Shared Financial Services, GlaxoSmithKline, discussed how GSK North America is using Ariba solutions for PO and invoice automation to attack the remainder of its paper. Al was the guest speaker on our Best Practices webinar this month. Among the benefits of e-invoicing that he touted in his presentation was a reduction of invoice processing costs by more than 60%, the ability to enroll 1500+ suppliers in 9 months, and 85% e-invoice penetration by May 1 of this year.

 

Al’s presentation explored many elements of his e-invoicing initiative, including an overview of the solution, the supplier enablement process, dealing with supplier objections, and lessons learned.

 

The presentation also featured extensive Q&A, as the audience was quite engaged. As always, we’ve recorded the webinar for future playback. So for those of you who missed the live presentation but want more insight into e-invoicing, set aside time to listen to the recording.

How much time does your purchasing organization spend coding invoices and managing transactions?

 

At Maxim Healthcare, it was about 40 percent of procurement’s time, and that meant time not spent on managing vendors and corporate spend, and driving performance improvements.

 

Automation freed up that time, with one system handling everything from PO creation and delivery to invoice and payment processing. Equally important was the ability to capture line level invoice data to better manage spend. The cost savings are substantial: deep six-figure savings from one product category alone, according to Jeff Halper, Maxim Healthcare director of procurement.

 

Ariba caught up with Jeff at last month’s Ariba Live. Hear what he has to say.

 

And let us know the approaches you are taking to drive productivity breakthroughs in procurement and accounts payable.

According to Al Barbee, director of North American Financial Shared Services, GlaxoSmithKline, the time for e-invoicing is now.

 

“Getting to e-invoicing, especially in today’s global environment, makes a whole lot of sense,” he said in an interview at Ariba Live 2011. “It eliminates all of those steps in the process that are manual, and reduces all the chances for things to go wrong."

 

The ability of suppliers to “flip” POs delivered via the Ariba Network into electronic invoices improves efficiency, noted Barbee, so much so that it has contributed to a reduction of more than 20% of staff at GlaxoSmithKline’s BPO provider.

 

The primary reason for choosing Ariba to move toward a paperless invoice processing environment was the supplier match: more than 50% of GSK suppliers were already on the Ariba Network. “That made the actual conversion much easier and faster,” said Barbee.

 

To hear more about GlaxoSmithKline’s paperless invoice processing approach, don’t miss our May 19 webinar. Al is the featured speaker and will go into more detail of GSK’s success in eliminating paper from accounts payable.

Leading organizations recognize the value that supplier enablement brings to a successful e-invoicing intiative. And you can learn more about supplier enablement at Ariba Live.

 

Ariba Live features a panel session where you will hear about strategies for targeting, tracking and on-boarding suppliers with the latest methodology, technology and services.

 

Breakthrough Supplier Enablement
View more presentations from Ariba

 

If you are joining us Nashville, don’t miss this session, scheduled for Tuesday, April 12, 3:15 p.m. - 4:30 p.m.

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