Beyond Plastics to ePayables Solutions · • Cycle time reduction between 5 – 20 days Sources:...
Transcript of Beyond Plastics to ePayables Solutions · • Cycle time reduction between 5 – 20 days Sources:...
Beyond Plastics to ePayables
Solutions
Jeff Pape, Senior Vice President Payables Strategy
2
Agenda
• Key market trends
• Strategic product enablers
–Virtual accounts
–Electronic invoicing
• Where are we going?
3
Global Commercial B2B Market Commercial Consumption Expenditure (CCE) captures global business to business spend by region
Source: Visa Commercial Consumption Expenditure Index; Economist Intelligence Unit (EIU) modeling and analysis, July 2010. Global CCE index data sources include Bureau of
Economic Analysis (BEA), U.S. Census Bureau, Organization for Economic Cooperation and Development (OECD), STructural ANalysis (STAN) Database, EuroStat Database,
General Government Accounts from the National Accounts of OECD Countries, United Nations Statistics Division National Accounts Main Aggregates Database, EIU proprietary
databases, government data and EIU model estimates where government data was unavailable. Large contracted defense spending not included in CCE index.
LAC CEMEA Asia Pacific Europe Canada USA
% Share 2009 Global CCE
81
72 65
94
88
5 Year
CAGR = 8%
Canada
2%
USA
21%
Europe
32%
Asia Pacific
29%
CEMEA
9%
LAC
6%
2005 2006 2007 2008 2009
2009 Global CCE Distribution 100% = $88T
4
Large
Medium
Small
Percentage of respondents, n =166
Aberdeen Research, May 2010
Factors Driving ePayment Growth
Catalysts for driving ePayment activities within organizations Respondents were asked to select two pressures driving ePayment activities
5
Payment and Reconciliation
Electronic payments are a significant opportunity for cost savings
Illustrative Example Only
$0
$2
$4
$6
$8
$10
$12
Wire Check ACH Card EIPP
Aberdeen Group May 2010 Study: "Global
Payments: Maximizing Cash Flow with
Electronic Payments and Process Automation"
Payment Costs
$0
$2
$4
$6
$8
$10
$12
Manual EIPP
Accenture 2007 Study: "The Role
of Procurement Cards in the
Source-to-Settle Process"
Reconciliation Costs
6
ePayments and eInvoicing Adoption
Payment Mix by Volume
Source: PayStream Advisors; eInvoicing Adoption Benchmarking Report Q2 2011
Benefits of e Invoicing
7
What is the Savings Potential…
• Cost reduction between $4 - $30 per invoice
• Cycle time reduction between 5 – 20 days
Sources: Aberdeen Group, “E-Payables 2011 – Efficiency, Visibility, and
Collaboration in the Financial Supply Chain”
Maturity
Class
Cost to
Process a
Single
Invoice
Cycle
Time to
Process
a Single
Invoice
Best-in-
Class $7.78 5.3 days
Average $12.05 10.2 days
Laggard $37.45 24.5 days
$25.83
41.3
$18.27 14.2
$4.84
3.7
8
• Over 25% of organizations have adopted virtual purchasing card accounts (EAP)
• For organizations with $1 billion+ revenue, the adoption rate is nearly double.
• Over the next three years, EAP use will grow by over 40%.*
• EAP Terms
• Virtual Card, single-use accounts, straight-through processing, buyer-initiated payments,
EIPP
* Source: 2010 RPMG “Purchasing Card Benchmark Survey Report”
AP Automation: Electronic Accounts Payable
9
• The greatest obstacles are perceived external barriers regarding the willingness
and/or capability of suppliers to accept e-payments
• The internal cost and/or capability to manage the transition to e-payments is
another major concern
More than 75% of organizations believe
that suppliers who currently receive
paper checks will be able to receive e-payments within
three years.
Barriers to Implementing e-Payments
Source: U.S. Bank / IAPP Study 2010
10
Buyer Supplier
Lost or Missing
Invoices
Manual Data
Entry
Manual Routing
Lost or Missing
Invoices
Paper Invoice Downstream Effects
Inefficient processes, late payments, missed
discounts, working capital compression
17%
17%
21%
50%
51%
60%
Decentralized Invoice Receipt
High Number of Discrepancies & Exceptions
Lost or Missing Invoices
Manual Routing of Invoices for Approval
Manual Data Entry and Inefficient Processes
Majority of Invoices Received in Paper Format
Challenges Reported in the Invoice
Management Process
Source: “Electronic Invoice Management, No More Recycling:
Get Rid of Paper from the Source,” PayStream Advisors Q3 2010.
Invoice Management Challenges
Removing paper mitigates downstream effects.
11
Technology for Best-in-Class Organizations
Technology Choices of the Best-in-Class
Source: Aberdeen Group, August 2011.
12
Source: Q2 PayStream – eInvoicing Adoption Benchmarking Report
Front-End AP Automation
Usage of Front End AP Automation Technologies
13
eInvoicing Adoption
Adoption of eInvoicing Solutions
Source: Q2 PayStream – eInvoicing Adoption Benchmarking Report
14
• Cooperative approach between two participants
• Buyer – uses EIPP for A/P
• Supplier – uses EIPP for A/R
• Both parties review and manage their transactions online
• Both parties have real-time visibility to invoice and payment status
• Both parties collaborate online to resolve disputes or exceptions
PRESENT
PROCESS PAY
FINANCE
How Electronic Invoice Presentment
and Payment (EIPP) Works
15
EIPP Provides a Clear Path to
Best-in-Class Payables Processing
Evolution of Invoice
Processing
1. Reliance on paper-based manual processes
2. Automation of process-to-pay
3. Matching of invoices to buyer reference documents
4. Submission of electronic invoices by suppliers; visibility into payables and receivables
5. Enablement of complete AP-AR view, providing active working capital management and trade finance for buyers and suppliers
16
• Electronic invoice processing via EDI and online interfaces
• Automated business rule applications and audit
• Online exception management eliminates rejections, enables resolution
• Electronic settlement to suppliers (ACH/EFT/Card)
• Robust analytics provide instant access to business intelligence
• Improved payment and business intelligence leads to supply chain efficiency
Maximize opportunities to streamline processes and glean relevant, actionable data
Electronic
Processing
Exception
Resolution
Electronic
Settlement Analytics Supply
Chain
Efficiency
Collaborative
Interface
Technology Drives Efficiency
17
Audit
Analysis
Orders for Goods or Services
1
Electronic invoice
routing & approval 3
G/L Posting
4
Single Payment to U.S. Bank 5 Multiple Payments
and Detailed Remittance
6
Invoices (electronic or paper)
2
BUYER SELLER
Buyer Services
• Pre-implementation AP analysis
• System integration
• Supplier setup
• Relationship management
Supplier Services
• Supplier outreach
• Settlement / finance options
• Electronic integration options
• Relationship management
EIPP Standard Process Flow
18
Working Capital Optimization Strategies
Top strategies for alleviating business pressure
Source: Aberdeen Group, January 2011.
19 19
Is Now the Right Time?
Should I wait for the mobile revolution instead?
You need
to get started
yesterday You have
tools now to
fit your
needs
Mobile and
other
innovation
will build on
these
options
Cards, EIPP, ACH
and Wires will
form the backbone
for the
foreseeable
future
20
How Do I Get Started?
Map out current
payable and
receivable
processes
Review IT
resources;
determine desired
automation level
Consult with
banking partners
Consult with
trading partners to
determine interest
and effort required
Obtain
senior manager
buy-in
Drive
adoption
21
Questions?
22
Thank You
Presentations are available now on
www.usbank.com/sp2presentations
Complete a survey on this session at:
www.gsasmartpayconference.org/survey
©2012 U.S. Bank. All trademarks are the property of their respective owners.