Finance and Account Payable functions haven’t always been regarded as bastions of innovation. Often, the impression of these cash management workhorses is weighed down by too much paper, too many people and inefficient processes. But when process automation and data visibility link up with Finance and AP, these departments can be transformed into functions that are skilled at slashing costs and capturing more cash. In other words, Finance and AP become strategic weapons for funding innovation and business growth.
Ariba’s James Tucker often uses the strategic weapon metaphor when speaking with Finance and AP executives who want to position their functions as critical assets within their companies.
James is the global director for Ariba’s network and finance solutions. During Ariba LIVE, he will host the following breakout sessions:
- Turn your P2P function into a Strategic Profit Center: Key Strategies and Metrics for Achieving World-Class Performance
- Contract Invoicing: Gaining Control of Non-PO Invoices
I spoke with James recently about what attendees can expect to learn from these sessions.
James, how has data visibility become a transformational tool for Finance and AP?
It starts with the invoice. Nearly 80% of business transactions are still paper-based. That paper dependency essentially traps data that can identify cost savings and better cash management opportunities.
Once companies start implementing e-invoicing, they unlock data that can be used to drive better pricing, contract compliance, and error-free invoices that speed up processing time and lower operating costs. It also helps capture negotiated savings and uncovers new opportunities for securing early-payment discounts, optimizing working capital, and generating high-yield, risk-free returns on short-term cash.
Suppliers benefit too because the visibility they gain enables them to better predict cash flow and collaborate with their customers on dynamic discounting and receivables financing. Suppliers also save time and money because they no longer need to chase after payment status with calls to their customer’s AP department.
What will attendees hear in your sessions to help them make the business case for e-invoicing?
Numbers help tell the story … and there are some powerful numbers when it comes to e-invoicing.
By implementing e-invoicing, companies can capture millions in savings that can be reinvested for business growth. These savings can be captured in four key areas of business:
1) Process Savings
For many enterprises, process savings can translate into about $1 million per $1 billion in spend. These include reduced errors and exceptions on invoices, fewer resources needed to process paper, and less time spent matching invoices to POs and contracts.
2) Discount Savings
Dynamic discounting can help deliver an additional $2 million in savings for every $1 billion in discountable spend. Data and network visibility available from e-invoices enables savings through the network effect of improved collaboration between buyers and sellers.
3) Working Capital Impact
Companies can gain nearly $3 million in working capital impact for every $1 billion per day of improved DPO, DSO, and DIO. Many AP departments have so many invoices to process that they simply pay invoices upon receipt. The power of the Ariba Network can be leveraged to optimize and control payment terms and timing for both buyers and sellers.
4) Improved Compliance
Savings gained from improved compliance can deliver over $4 million per $1 billion in spend. This is accomplished through compliance with contract pricing, spend directed to preferred vendors, and VAT/tax and other regulatory compliance savings.
It all adds up to new and improved ways to manage cash better -- ways that in today’s global economic market no company wants to ignore.
SunTrust and UPS are saving millions on preventing contract leakage because of business network visibility, data automation, control, and compliance. Both companies will be speaking at my session on contract invoicing. And ING and QuadGraphics have disciplined approaches to leveraging benchmarks and measuring results against their stated objectives. They will be sharing their expertise at my session on P2P Performance Measurement.
James, you’ve talked about visibility as a strategic weapon that companies should embrace. How are you personally taking advantage of visibility?
As a chess player, I’ve found that I can see three to five moves ahead of my opponent while they are still contemplating the next move. So yes, visibility does have its advantages.
Don’t overlook adding James’ sessions to your Ariba LIVE agenda. To learn more about his thoughts on invoice management, business networks, and performance measurement strategies, read James’ postings at The Networked Economy blog and follow him on Twitter @jbtucker3.
Photo credit: © Oleg Samoylov – Fotolia.com