At last week’s Shared Services Link “e-E-Invoicing Europe” conference in Paris, Simon Dunn, HSBC head of group supply systems, group purchasing, discussed the role of e-invoicing for the financial institution’s global finance transformation initiative. The ability to leverage Ariba’s approach to e-invoicing to lower invoice processing costs, improve compliance, and optimize working capital is helping to improve HSBC’s global business performance.
HSBC handles more than one million global invoices a year. Before Ariba, HSBC operated a decentralized processing environment. Business users would often hold invoices past the due date—a common problem when paper invoices are sent to a field office—then forward them to accounts payable for payment. At HSBC, these tardy invoices would be treated as urgent payment requests. “That makes them three to four times more expensive to pay than a normal invoice,” said Dunn.
With e-invoicing, HSBC has compressed its invoice processing cycle by more than 60%. Process improvements include 2- and 3-way invoice matches (with purchase orders and contracts), electronic workflow for required invoice approvals, and proactive exception management. In addition, HSBC uses an Ariba service to scan and convert paper invoices to an electronic format for automated processing. The result? “Electronic invoices are fully matched, validated, approved, and ready to pay in less than 10 days,” said Dunn.
HSBC is improving compliance by integrating its invoice processing, purchase order, and contract management systems—all from Ariba. Suppliers have options for submitting invoices, which helps drive supplier enablement. With Ariba PO-Flip™, HSBC suppliers have an easy way to create an invoice from a PO to drive high first-time match rates.
HSBC is achieving cost savings of more than 65% with e-invoicing, and realizing substantial additional value from leveraging early payment discounts. This is especially true, notes Dunn, during fiscal year-end periods, when suppliers have a need for cash. In many cases, the returns from these discounts far exceed any other investment option. In addition, with Ariba, HSBC is able to track spend by commodity codes as opposed to the broader general ledger codes. This improves spend analysis, assisting procurement in identifying strategic sourcing and cost savings opportunities.
Dunn sees opportunities for further e-invoicing expansion across Europe and Asia-Pacific. Recently, HSBC extended e-invoicing to Singapore. “It’s the easiest territory we’ve had for supplier adoption,” said Dunn.