Invoice Automation for Fast and Early Payments...Price Quantity Amount PO match Contract match...

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Ajain Kuzhimattathil, SAPJeff Stuckey, Corporate Controller – Roseberg Forest

Invoice Automation for Fast and Early Payments

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How often does an organization capture early-payment discounts on invoices?

69%

18%

13%

Sometimes Always Never


Top reasons for missed discounts

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Lengthy Approval Cycles

Missing Information on Invoices

Lost Invoices

Large Number of Exceptions

Manual routing of Invoice

Decentralized Invoice Receipt

41%

39%

36%

32%

31%

30%


buyer supplier

Invoice automation

Buyer

Invoice pdf

Invoice cXML

Integrated supplier

SAP Ariba Cloud Integration Gateway

EDI

Online supplier

Legalization

Third-party ERP,

Oracle PeopleSoft

PO-flip invoiceContract invoiceService invoiceNon-PO invoiceCSV invoice

SAP Ariba Cloud Integration Gateway

Common interface adapters

Tax authority

SAP Ariba Invoice Management


Smart business rules further streamline the process

BuyerSupplier

Price Quantity Amount

PO match Contract match Receipt match Service sheet

match

Supplier ID Invoice

number Invoice

date Ship-to

address Bill-to

address

VAT/GST compliance

Digital signature

SAP Ariba Invoice Management

There are over 100 configurable rulesthat capture errors and exceptions before they reach accounts payable and procurement.

The supplier network provides real-time access to PO, invoice, and payment status, eliminating inquiries to accounts payable and procurement.

Invoice

Error

Exception

The smart-processing approach in SAP Ariba solutions drives touchless invoicing rates of 98% by eliminating errors and exceptions at the point of supplier submission.


Ariba Network: Aerial view

SUPPLIERRemittance

Service sheet

BUYER

Invoice statusInvoice status

cXML invoice

Non-PO invoiceService sheet

cXML invoicecXML service sheet

CSV invoice CSV service sheet

EDI invoice

Invoice

cXML invoice status

Paper invoice

Service sheet

InvoiceApprovedinvoice

Remittance

Payment instruction

Payment status

Payment status

Service sheet response

Payment instruction

Payment proposal request

cXMLinvoice

SAP Ariba Buying and Invoicing, SAP AribaInvoice Management

Approvedservice sheet

Service sheet response

Legalization Invoice conversion

PaymentsSupply chain financing

Business rules

Approvals and reconciliation

Any ERP

ERP

Early-payment discount request

Early-payment discount offer

PO-flip invoiceContract invoiceService invoice

Any ERP

ERP

Discounting

E-archiving

Contract and services invoicing

Documents in yellow

Business network interoperability

Tax engineOpen API

Approve invoices

Validate and enrichReport and export

PDFinvoice

Open payments

PDF Uploader

Open supply chain financing

Open ICS


SAP Ariba Financial Supply Chain portfolio

Support all invoices and funding scenarios, complementing other processes using SAP Ariba solutions

All spend itemsAll suppliers

Payments

Supplier agrees to be paid by buyer over the network.

Medium to large spend itemsSmall and midsize suppliers

Larger spend itemsMidsize to large suppliers

Discounting

Supplier agrees to be paid by buyer at prorated discount

prior to due date.

Supply chain finance

Supplier sells approved invoices to funder at discounted rate based

on buyer’s creditworthiness.

All spend itemsAll suppliers

Invoices

Suppliers issue invoices over the network.


A standard account for Ariba Network is free for suppliers. The typical annual bill for enterprise accounts is US$840.


SAP Ariba Payables: Supply chain finance

Key features Buyers are allowed to offer third-party financing

for suppliers through Ariba Network. This third-party financing accelerates payment

of approved invoices. Suppliers can receive earlier payments and

improve their days sales outstanding.


SAP Ariba Payables: Payments

Key features Rich remittance information Payment tracking status Remittance delivery to suppliers Support for payment and remittance

information integration to supplier Bank transmission and exception alerts Matching between remittances and invoices

£ GBP GBP GBP

££

£ GBP£ GBP £ GBP GBP GBP£ £

GBP GBPGBPGBP

GBP

££

££

£


SAP Ariba Payables: Card payments

Key features Payments using single-use tokens for

approved invoices Capabilities coming soon:

– Pay on purchase orders using single-use tokens

– Multiple methods to consume a single-use card number

– Reconciliation support from SAP

£ GBP GBP GBP

££

£ GBP£ GBP £ GBP GBP GBP£ £

GBP GBPGBPGBP

GBP

££

££

£


SAP Ariba Payables: Dynamic discounting

Key features Standing early-payment terms Buyer-initiated dynamic discount Supplier-initiated dynamic discount Reporting


80-year-old integrated forest-products company: Production of wood products, substantial landowner Geographically diverse – operations in 10 states

Scope of SAP Ariba solutions – 3,200 suppliers ~100,000 invoices submitted by external suppliers annually Raw materials (excluding logs, which are managed separately) Spend for maintenance, repair, and operations Services Fuels

Overview of Roseburg Forest Products


A Look at How Roseburg Did Dynamic Discounting

1. Legacy Condition Evaluation and Strategy Development

2. Supplier Outreach

3. Technology Use


1. Legacy condition Over 100 payment terms, with a general tendency toward payment terms around 30 days

– Often actual payment was closer to 40 days

Contact information often in poor shape

~$200,000 of discounts missed annually due to inability to approve invoices in a timely manner

~30% of invoices not in system before their due date

2. Strategy Standardized payment terms are around net 45. Discounts for shorter terms should be sought.

Between pushing out terms for some and shortening to get discounts for others, net working capital would remain the same with increased discounts overall.

Capturing previously missed discounts and incremental discounts is a major return component in the automation initiative.

Roseburg’s legacy condition and strategy


1. SAP looks at the spend file and attempts to make recommendations on priority based on the company’s objectives. At the end of the process, there is a collaborative list.

2. SAP will reach out in waves to the suppliers identified in the initiative. Suppliers reached out to Roseburg with questions. Make sure resources are available and messaging is

clear.

3. Results include: 82 of 629 (13%) suppliers outreached have elected new early-payment terms. Based on their historical

spend, this amounts to $167,000 annually in new discounts.

Included in the outreach was the opportunity to sign up for EFT instead of check.

Some suppliers also elected sliding-scale discounts, meaning a portion of the discount can still be captured even if payment is outside of the discounting window.

Supplier outreach (utilizing a discounting capability subscription)


1. One of the features of dynamic discounting is a “Pay Me Now” function. This has flexible configuration on the buyer side (that is, different discounts can be configured for different suppliers).

2. Roseburg chose a straightforward approach. Pay Me Now is designed to have a 24% APY. The discount can be taken at any time but goes down as the payment date approaches. This is effective only if the invoice is approved.

One large supplier has frequently taken advantage of this offer for ~$150,000 of discounts over the course of a year.

Some uptake happened early on. There was a noticeable increase from small and midsize companies in the second half of 2018 as our section of the economy cooled.

Although we internally create vouchers for our outbound transportation (truck) vendors, they also have access to and take advantage of the Pay Me Now function.

Using the technology


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Contact information:

Jeff StuckeyCorporate Controller – Roseburg+1 541-679-2128

Ajain KuzhimattathilSolution Consulting – SAP+1 312-848-5575

Thank you.

Invoice Automation for Fast and Early Payments...Price Quantity Amount PO match Contract match...

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