While there is no dispute over savings derived from automating and controlling the requisition of commodities -- preferred pricing, improved supplier relations, control over maverick spend to name a few. But is automation of a few commodities good enough?
Studies show that 80% of invoices are still paper based, which implies that only a fraction of invoices and spend is automated. The cost to handle paper, deal with invoice exceptions, missed discounts, and compliance only scratch the surface in terms of potential savings a broader electronic invoicing (e-Invoicing) initiative can deliver.
Your payables organization must process all invoices regardless of whether they originate from e-Procurement, a contract, or a hand shake. The savings potential from payables automation is evident based on stories that are pouring in across virtually every industry category including Financial Services, Communications, Technology, Life Sciences, Manufacturing, Services, Public Sector, Retail and Consumer Goods, Energy – Utilities, Transportation, and Media & Entertainment.
Nalco is a great example of one of these stories. Belinda, Director of Procurement Programs, shared in this YouTube exclusive, how Nalco is leveraging the power of the Ariba Network to improve visibility and control of their drop ship process. They no longer lose 3% of their PO’s, and have reduced days sale outstanding (DSO) by 5 days through electronic invoicing. Click here to watch:
I discussed many of these topics in my December 16 best-practice webinar, Payables Automation: Drive More Cost Savings in Your Procure-to-Pay Cycle, and wrapped up the discussion with elements of an e-Invoicing business case often overlooked. According to the Hackett Group, maximizing discount capture and ensuring compliance with contracts and preferred suppliers can deliver cost savings of $9 million for every $1 billion of spend. And most companies miss about 70% of prenegotiated discounts leaving about $2 million of additional savings on the table.
If you are not capturing these savings from your procure-to-pay initiative, you’ll want to watch the recorded webinar. You can access it at www.ariba.com/programs/invoicenow.
I’m eager to hear from more of you how you’ve aligned Procurement and Accounts Payable to drive similar process efficiencies and savings.