Kurtz’s Korner:  Smart Invoicing Business Rules

Over the past few months, I’ve spoken with many of our on-premise customers about their use of the Ariba e-Invoice solution.  While I was happy to hear about the overall increase in usage and adoption of the solution, one piece of consistent feedback involved the number of exceptions that AP organizations continue to process.  On average, companies find errors and exceptions in 28% of their invoices.

I consulted some experts on the Ariba team, and we discovered a disturbing trend.  Many of our on- premise Ariba e-Invoice customers are not taking advantage of the “smart invoicing” business rules available on the Ariba Network to validate invoices.  These rules are divided into 3 main categories, which you can use for reference. They are:

  1. Level 1 – Header or field- level validation to make sure that all required fields on an invoice have data in them, regardless of whether that data is correct.  If a required field such as price, date, ship-to-address or invoice number is blank, the software can reject the invoice.
  2. Level 2 – Looks at line-item detail inside these mandatory fields and ensures that the data conforms to the buyer’s business rules. This is where the Ariba Network catches discrepancies such as an incorrect price or quantity, incorrect business unit listed as the receiver, etc.
  3. Level 3 – Checks the invoice against other documents or accounting data such as the advance ship notice, the purchasing contract, account coding, taxes, etc. to catch discrepancies and non-compliance.

    

The Ariba Network now features more than 70 business rules, which can be leveraged to drive auto-post rates – no required Accounts Payable touch -- of invoices into a customer’s ERP as high as 98%.  To hear Ariba customers discuss the value they are receiving from what we call smart invoicing, visit this web page:

  1. www.ariba.com/go/e-invoicing_success

So, what can you do?  What should you do next?

  • Track the number of errors and exceptions your Accounts Payable organization is handling today and include the reason codes for each error and exception
  • Contact your Customer Engagement Executive and ask for an assessment of your use of the Ariba Network’s business rules

    

If you’re a seller on the Network:

  • Track the number of errors and exceptions you receive while submitting invoices to your customers.
  • Collaborate with your customer on opportunities for applying business rules in the Ariba Network to avoid these errors and exceptions going forward
  • Monitor your Days Sales Outstanding (DSO) for the customers you’re sending invoices to via the Ariba Network
  • Benchmark the Ariba Network DSO to your other DSO statistics

 

Effective use of the Ariba Network business rules will go a long way to maximizing your results from Ariba e-Invoicing. Please let me know your thoughts on this topic, and share your experiences using our business rules to improve your  straight-through invoice processing rates.

Jason Kurtz
Vice President and General Manager, Ariba Network and Financial Solutions

jkurtz@ariba.com