Transform the AP Process Now Go Paperless and Maximize ROI with AP Automation

Transform the AP Process Now:

Go Paperless and Maximize ROI

with AP Automation!

The Accounts Payable Channel

2100 RiverEdge Parkway, Suite 380

Atlanta, GA 30328

Contact: [email protected]

866-827-6389

770-984-1184

www.TheAPChannel.com

www.TheAPChannel.com • 770-984-1184

©2011 Financial Operations Networks LLC

Today’s Presenters

Judy Bicking, APMFormer Global Director, Accounts Payable European Project,

Johnson & JohnsonAP & AR Best Practice Consultant and

Owner of Island Decor & More / Ship to Shore Home Decor

Sushmitha KokaSr. Director for Product Marketing, ADP



What is the

Goal of AP?

• ENSURE: on-time, accurate payments

• Compliance with Internal Controls— Eliminate Losses

• Lost Invoices

• Lost Discounts

• Duplicate Payments

—Minimize waste• Handling the same invoice over and over (touch it once)

• Handling multiple copies of an invoice

• Responding to inquiries



What is the

Goal of AP? (Cont’d.)

• Safeguard assets/Prevent unauthorized use or

misappropriation of cash

—Fraudulent Invoices

—Ensuring contract pricing matches purchases

—Receiving invoice directly from supplier

—Appropriate approvals

—Three way match



Issues with Manual

Paper Process

• Lost Invoices (The largest and most perplexing problem

an AP department faces is lost invoices.)

• Difficult to audit against contract prices

• High Processing Cost

• Labor intensive closings procedures

• Process prone to many errors

• Duplicate invoices = Duplicate Payments



Issues with Manual

Paper Process (Cont’d.)

• Can damage:

—Companies’ credit score

—Supplier relationships

• Lost Cash Discounts

• Jeopardizes Internal Controls

• Fraudulent invoices can get through



Four Largest

AP Headaches

1. Receiving the original invoice

2. Finding the invoice once it is received

3. Lack of receipt for 3-way match (80% of mismatches)

4. Late Payments



Four Largest

AP Headaches (Cont’d.)

1. Receiving the original invoice—Largest bottleneck in the invoice process

— Invoices paid late

—Lost discounts

—Late fees

—AP’s reputation

Buyer

Requestor

Approver

AP

Supplier

P

A

S

T

D

U

E



Four Largest


2. Finding the invoice once it is received

―I need you to fax me a copy

before I can help you‖

Here, you take it.

NO you take it….

Causes Duplicate Payments

Perception: AP is out of control…



Four Largest


3. Lack of receipt for 3-way match

Case Study reflected:

80% of mismatches

caused by

Lack of Receipt

99.9% were

actually received



Four Largest


4. Late Payments—Shipments on hold

• affect production, projects, research…

—Terms removed

—Companies’ Credit Score

—Late fees and penalties

— Impaired Supplier relationship

— Impaired Buyer/Requisitioner relationship



Poll Question

Where do you stand with regards

to automating your invoice and

payment management processes?

1.We are already highly automated.

2.We are currently deploying a solution.

3.We are considering implementing a solution.

4.We have no plans of automating in the near future.



Why Invest in AP?

• AP is responsible for the company’s #1 asset:— CASH

• Bring P2P under control:— Drastically improved cycle time

— Invoices paid on time

— Capture discounts

— Accurate closings and Financial Reporting

— Approvals to the appropriate person

—Mismatches resolved by appropriate person

— Documented workflow

— Implement Spend Management



Number One

Best Practice

• Research will reveal that e-Invoicing with workflow is

the number ONE best practice

• It eliminates:—Paper

—Entering data into the AP system

—Lost invoices

—Data entry errors

—Mismatches

—All associated costs

—AP as being the cause of all late payments



Benefits to e-Invoicing

with Workflow• Accurate & Timely Payments – invoice paid on time from 45% to 95%

— Cost for payments made one day early

— Earned discounts

• Reduce cost— Cost per invoice ranges from $2-$20. e-Invoicing can be as low as pennies!!!

— Soft savings = time

— Hard savings = people, equipment, material, rent, postage

— Opportunity: discount gained, improved supplier relations• AP Heads: AP is very labor intensive (salary/benefits)

• AP department – sq. ft. for staff

• AP invoice storage— Space in sq. ft.

— Number of filing cabinets

— Filing Supplies (folders, hanging folders, labels, etc)

• Copy Machines (make copies to mail – approvals/problem resolution)

• Postage (sending invoice out for approvals, discrepancy review)

• Telephone (cost per line, outbound calls, 800 numbers…)

• Fax machines and their phone lines

• Company mailroom and AP’s mailroom

• Shredding invoices >7 years (protects company information)




with Workflow (Cont’d.)

• Reduce cost (Cont’d.)

— Time: Eliminates/reduces manual labor• Opening & sorting invoices (every supplier has different terms and conditions)

• Looking for the invoice by AP, Buyer, Requisitioner, Tax, GL, Proj Acct, Marketing, Lawyers…

• AP Processor keying data several times (3 – 5 copies)

• Discrepancy clerk resolving mismatches

• Check Processor (insist on EFT)

• Customer Service, buyers, requisitioners on phone resolving inquiries

• Manually routing invoices for AP, company mailroom, requestors, buyers, suppliers— Approvals

— Discrepancy resolution

• Rekeying data. Multiple invoices (3-5 copies per invoice)

• Decision making – overriding terms, ignoring problem resolution, easy vs. hard

• Filing and re-filing the invoice at every stage of the process = lost invoices

• Best Practices: header match, negative receipt tolerance…

• Walking invoice to next step— To Vendor Maintenance – update the VM record

— To buyer – discrepancy resolution

— To Tax Department – for Sales & Use Tax or VAT questions





• Improve productivity (inv/assoc (15,000 - 180,000 yr.)

• Rapid resolution of mismatches (80% receipt; 15% price;

5% quantity)

—Workflow sends to appropriate person

—Reflects aging per queue

—Escalates issues not attended to in xx number of days

• Reduce duplicate payments (3 - 5 copies of invoice)

• Major reduction of customer and in-house payment inquiries

• Audits completed quickly & accurately: (Reduce/eliminate

fines and penalties)

—Sales & use tax audits/ W9s/1099s /1042s and IRS audits





• Improve AP Cycle time: invoice recorded within 1 – 3 days

vs. 30 – 320 days

—Accurate monthly closings & Financial Reporting – NOT

Labor intensive !!

—Accurate budgets

—Discounts and rebates

— Improves Cash Flow DPO

—Respond to inquiries first time – invoice tracked from day

one – self service

• Cash Flow Management

—Committed spend (Pre-age trial balance)

• Eliminate process flow issues





• Accurate invoice data = proper payments: not over or short/too early or late

• AP viewed as a Professional Business Partner— Satisfied suppliers, buyers, requestors

• Price negotiation – Spend Management: Volume to one supplier (actual vs. estimated)

• Terms – if you don’t have terms, now you can request terms

• No hidden price increases

• Shipments not put on hold

• Ensure accurate paper trail and history: will point out the ―real‖ process

flow issues

• Eliminates opportunity for fraud— Wrong approvers

— Buying from invalid suppliers

— Paying invalid suppliers

• Eliminates paper— Reduces department space (better use of real estate)

— Eliminates storage area

— Eliminates shredding process

— Eliminates misfiling of paper invoice



Why Should

Suppliers Use e-Invoicing?

• Improves their cash flow (DSO)

• Eliminates manual labor—Printing the invoice

—Manually mailing the invoice

—Resolving mismatches

• Eliminates cost—Paper and storage of paper

—Envelopes

—Postage

—Credit & A/R debt collection

—Selling receivables or borrowing cash



Reevaluate

• Segregation of Duties

• Retention Plan

• Disaster Recovery

• Go back over and make sure everything is working

as expected



How to Gain Results

• Keep it Vanilla—Don’t change the code!!!!

—Don’t force your current process into

the new system

—Change your process!!!

• Insist on EFT

• Eliminate receipt mismatches with new process

• Don’t try to do everything—start with e-invoicing top down

—smaller volume: use p-card or scanning



About ADP

• ADP is a global leader in procure-to-pay and

invoice automation

• Serves more than 585,000 clients in 31 countries around

the globe

• Over 80 percent of the FORTUNE 500® companies and

over 90 percent of the FORTUNE 100 use at least one of

ADP’s services



About ADP (Cont’d.)

• Only information technology company and one of a

handful of global companies with a ―AAA‖ rating from

the leading investment ratings agencies

• $1.3 Trillion in client funds moved leveraging a world

Class, secure payment environment

• Over 16,000 suppliers transacting every day and

growing exponentially

• Network processes 10 million transactions and $50 billion

spend annually



Optimizing your Processes

with ADP Procure-to-Pay



Reducing Costs

Invoice Receipt• Electronic invoicing via integration, portal, LIDO

• Scan and index for low volume suppliers

With ADP P2P• Reduce processing costs

• Accelerate processing cycles

• Eliminate supplier inquiries

Benefits

Workflow/Approvals• Automated routing and workflow for invoices

• Alerts, reminders and escalation procedures

Vendor Self-Service• Visibility to transaction status – reduced inquiries

• Collaborative dispute resolution

Supplier Network• Thousands of suppliers transacting every day

• Complete suite of supplier enablement services

Cost Reduction



Optimizing Working Capital

With ADP P2P:• Reduce payment costs

• Increase discount capture

• Accelerate receipt entry

Benefits

Discount Management• Alerts to prompt processing of invoices with discounts

• Dynamic discounting on a sliding scale

Working Capital Optimization

Payment Processing• Payments via check, ACH or card

• Remittance information delivery

Electronic Receipts• Ability for suppliers to upload electronic receipts

• Reconcile invoices with electronic receipts

Reporting & Analytics• Standard and ad hoc reporting capabilities

• Dashboards and aging summaries



Improving Control

With ADP P2P• Increase contract compliance

• Reduce invoice exceptions

• Increase control over business process

Benefits

Price Book Compliance• Upload and maintain price books

• Ensure compliance with negotiated pricing

Risk Mitigation/Increased Control

Invoice Validation• Validate invoices against pre-defined criteria

• Reduce number of errors and exceptions

Control Mechanisms• SAS 70 certification for enhanced controls

• Disaster recovery and business continuity

Workflow/Approvals• Automated routing and workflow for invoices

• Alerts, reminders and escalation procedures



The OpenInvoice Platform:

Complete, Scalable, Flexible

ADP® Invoice –

Enterprise

Edition

SingleIntegratedSolution

Scale Up or DownMix & Match

ADP® Invoice –

Professional

Edition

Line Item eInvoicing

eReceipts & Real Time Spend

Purchase Order Integration

2, 3 and 4-way Matching

Spend Categorization /Analysis

Dynamic Discounting

Electronic Line Items

Scanned Image eInvoicing

ERP Integration

Approval Workflow

Account Coding

Dispute Resolution

Supplier Self Registration

Vendor Self Service



Questions

If you have further questions,

please e-mail them to

[email protected]

Thank You!

The Accounts Payable Channel

2100 RiverEdge Parkway, Suite 380

Atlanta, GA 30328

Contact: [email protected]

866-827-6389

770-984-1184

www.TheAPChannel.com

For further information on this topic, contact

Transform the AP Process Now Go Paperless and Maximize ROI with AP Automation

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