P2P Insights 2015/16

Welcome

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Welcome to P2P Insights – an in-depth look at the latest news and developments across purchase to pay. One of the most interesting shifts over the last couple of years has been the move to greater collaboration in these areas. The benefits of a connected P2P environment mean that many organisations are taking a closer look at their processes and technology in order to make that connection happen. From e-invoicing and automation, to fraud detection and global process ownership, P2P professionals own many of the relationships and processes which link into strategic areas of the business, so becoming connected is vital. And, as organisations become ever more globally inter-dependant, effective supply chain management is forming a part of that.

Today, if you’re involved with purchase to pay, some of that supply chain management, and the financial reward to be gained from it, will fall in your area. In the past, organisations lacked the levels of visibility into their processes to be able to gain effective insight, but in many of today’s environments, automation and the accompanying reporting analysis, is both the driver and enabler of change.

So in this edition, we’re taking a close look at the importance of staying connected and the value of collaboration – strategically vital whether your organisation is global, national or public sector.

I hope you enjoy the read,

Yours sincerely,

Ellen LeithEditor

eleith@apn.today@APNewsChat

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ow e-Invoicing is Driving a Quiet Revolution in Supply Chain Finance

he Whole Greater than the Sum

he Changing Requirement of a Procurement & AP Professional

urchase to Pay: Why Procurement, Treasury and Finance Need to run on the Same Track

upplier Accounts: Time For Automated Reconciliation?

ccounts Payable in the Digital Age: From Overhead to Strategic Asset

echnology, Creativity and Collaboration have allcontributed to a journey which has fundamentally

changed the P2P landscape

he Accounts Payable’s Guide to Electronic Invoicing over an Open Network

lanning to Automate Your Purchase-to-Pay processes?

rust, Shame & Reputations - Truth & Lies in Today’s AP

Vendor Reference Guide

Contents

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Features

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How e-Invoicing is Driving a Quiet Revolution in Supply Chain Finance

Dematerialisation and ac-celeration effects are demon-strating that e-invoicing is a potential ‘game-changer’ for supply chain finance (SCF). A large element of the SCF product offering relies on the invoice as a key financ-ing ‘trigger’, providing the essential linkage between the physical and financial supply chains.

A physical supply chain is the series of business processes by which goods and services are purchased, transformed, and delivered, whereas the financial supply chain covers the series of financial processes that support the physical supply chain such as credit assessment and control, deployment of financing and risk mitigation instruments, invoicing, and payments.

Supply chain finance is defined1 as “the use of financial instruments, practices and technologies to optimise the management of the working capital and liquidity tied up in supply chain processes for collaborating business partners”.

Working capital is therefore the key to assess the relevance of SCF: Companies have costs associated with credit, bill-ing, supply chain risks, collection and bad debt associated payment terms, and cross border transac-tions. Smaller companies selling to larger ones have expensive, limited capital to finance, and higher capital costs. Working capital represents the amount of day-by-day operating liquidity available to a business, cal-culated as a mix of Accounts Receivable—the amount that customers owe a business; Inventory—the value calculated as the total amount of inventory held by the business in raw materials, work in progress, and finished goods; and, finally, Accounts Payable—payments due to suppliers for goods and services purchased.

Why is this important?

Optimising working capital requires however more than offering a set of financial instruments. It requires a thorough approach that consists of understanding and mapping a company’s information flows, its business and operational processes, and data insights. It also includes analytics of how the company exchanges its monetary flows with business partners when it operates as a buyer (i.e., focusing on payables), operates as a supplier (i.e., focusing on receivables), or looks at its internal opera-tions, thereby aiming to optimize levels of raw materials inventory, works in process, and flows of finished goods stocks.

Working capital is the lifeblood of a company that stays in good health by optimizing order-to-cash (i.e., collect-ing receivables the earliest possible), fulfil-to-service (i.e., holding minimal levels of inventory), and source-to-pay (i.e., paying suppliers the very last minute). In this balancing act SCF plays a pivotal role, allowing a company to cash in early receivables, offloading inventory values from its balance sheet, and pay late suppliers all in a sustainable way. The e-invoice becomes a pre-requisite for SCF: Once an invoice is

approved by the buyer, it becomes a receivable for discount, and e-invoicing makes earlier invoice ap-proval entirely possible increasing the ‘window of opportunity’ for

the provision of SCF. In fact, traditional (i.e., manual) invoice approval dramatically delays the time to receive and ap-prove inbound invoices, reducing the time-interval in which financing is feasible. Basing the process on an e-invoicing service creates some advantage in that the invoices are likely to be approved on an accelerated basis, thus offering an enlarged ‘window of opportunity’ for a longer tenor financing.

Understand Supply Chain Finance

All this can be made possible through the use of electronic invoices that act as catalysts of data triggered throughout the processes in the supply chain, as it becomes evident that an invoice carries more information than instructions for a payment, as illustrated in the chart below.

A day in the life of an invoice

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Physical supply chains are complex ecosystems of compa-nies that make, buy, sell, transport, store, control, check, and pay goods. Globalised supply chains make more difficult to assess the capabilities of a single company separated from the context it operates in. It becomes imperative to read every company’s profile within its supply network by reducing the limited local focus to the benefit of a wider and networked perspective. Digital data is the tool to read the entire system: Digital information flows are the ‘glue’ that keeps the ecosystem together. The e-invoice is indeed the baseline of such digital information, and can be considered as the ‘lenses’ of the supply chain.

1. Euro Banking Association, Supply Chain Finance: European market guide

By Enrico Camerinelli, Senior Research Analyst, Aite Group

The Whole>Aristotle’s quote – to give it in full “The whole is greater than the sum of its parts” – is particularly apt when looking at procure-ment to pay (P2P) processing. Traditionally the functions of purchasing and payment have taken place in separate, siloed, departments. With the move to a more strategic role and requirement to provide ‘added value’ for both procurement and accounts payable, organisations are increas-ingly adopting collaborative working across the purchase to pay process.

Regardless of size, all organisations purchase: raw materials, services, admin and business requirements, and all suppliers need payment. So it’s not only logical but – and particularly in light of procurement and AP departments increasingly shedding the mantle of back-office function – judicious to consider the purchase to pay requirements as one process, requiring one solution.

Implementing a digital P2P solution streamlines the processing for both functions. But, as powerful as those are stand-alone, digital P2P provides the control and visibility across the whole process necessary to be able to deliver procurement, AP and finance objectives at strategic level.

In practical terms creating purchase requests online brings immediate benefits – use of approved suppliers can be enforced where appropriate, spend authorisation and delegation of authority controls are in-built, budget and contract checking is automatic and general ledger coding accurately applied. Rogue purchases become a thing of the past.

And the benefits gained by taking control of purchasing drive further gains in accounts payable. Because purchases are approved up front, the greater part of the invoice management process can become fully automated; electronic invoices are captured, automatically matched and posted to the finance system ready for payment, often with no manual intervention.

Greater than the Sum

A P2P solution creates fast, efficient, straight-through – and paperless – processing.

Supplier query volume shrinks because payment timescales are more reliable – and reduces still further when suppliers have online visibility through an enquiry portal. The AP team can focus on handling anomalies and enabling and encouraging supplier and business unit compliance. Time previously spent handling invoices can be diverted towards streamlining the process and gaining further increases in efficiency.

The benefits of digital P2P processing are clear and proven yet by many have been regarded as the preserve of global conglomerates. With the development of the design, flexibility and scalability of solutions this is certainly not now the case, and mid-tier businesses and services are increasingly looking to take advantage of the benefits of efficient, streamlined processing and, where the procure to pay process is concerned, implementing a single solution to manage the whole procurement to invoice payment cycle.

Two key findings from PayStream Advisors’ recent survey looking at SMEs automating the purchase to pay process and reported in Automating P2P for Small to Medium Enterprises - Leveling the Playing Field for Business Process Automation, are that:

Implementing digital processing is an effective means of removing blocks to efficient cooperation between divisions. A digital solution enables and supports centralisation. The time taken to issue purchase orders and pay invoices is shortened – often dramatically so – and associated costs are reduced by automation and through straightening out and applying controls throughout the process.

CFOs cannot meet corporate objectives without control and visibility. A P2P suite embeds controls across the whole purchase to pay process and provides visibility, not simply via comprehensive audit trails but through provision of a window on to process efficiency, supplier performance and KPIs.

Confidence grows in knowing that buying policy is being fol-lowed, the best contracts negotiated and adhered to, that early payment discount is being taken up, late and dupli-cate payment avoided, and that inefficient processing is no longer affecting the profitability of the organisation.

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The whole is greater than the sum

Purchasing

=P2P+invoice payment +

“SMEs’ greatest pains are due to the high costs of long procedures, and decentralized processes.”

“SMEs seek benefits related to lower-ing these costs, speeding up processes, and building revenue.”

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By John Wallace, CEO Documation Software

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The Changing Requirementof a Procurement & AP Professional

By Helen Harris, P2P Operational Efficiency Manager, Dixons Carphone

ince I first started out in the profession some years ago, I remember when the Finance Team in my Local Government offices were still using a paper based sys-tem to order and pay any in-voices. That was back in late 90’s. “I’m not surprised”, I hear you say, well I was one of lucky ones who discov-ered the internet at a very young age and knew there was a very big world out there with a whole range of possibilities, discoverable from my own home.

Since this time quite a bit has changed. I still have the ability to review everything from my own home, except now I am able to review the requisitions raised by the business I work in, through to the receipting process and finally being able to pay my suppliers when it’s required. ERP systems have constantly been improved throughout the years to ensure the requirements of modern day business is met. In the early days these systems were about being able to track and monitor purchases and payments made to suppliers across the globe. Today, the systems we look at are required to be as easy as possible for the requester to use but be able to provide Finance

teams, at the touch of a but-ton, a report which shows how a specific cost centre or department through to region is tracking to budget at any given time.

The data extracted from any system is only as good as what is put in. This is why there is the constant re-quirement to have cleansed master data. This really is the key driver to any system. Without this the whole end to end process just would not function correctly.

Well every business has the same basic needs when it comes to ERP systems, how developed or progressed they are depends on you. My company has recently merged with another and currently we are running two Chart of Accounts as well as two different ERP Platforms. Financially this does not make sense and from a reporting aspect this is a nightmare. How-ever when two companies merge, a middle ground needs to found and with a lot of hard work one Chart of Accounts will be created with one ERP platform.

Why is choosing the right ERP Platform so important?

So began the arduous task of selecting the ERP provider. A working group was formed to collect the requirements of the com-pany. It was a long drawn out process but soon a lead-ing ERP provider was selected. Having worked with both leading ERP providers I needed convinc-ing that the one which was chosen represented the best fit for a retail environment. However when I challenged the decision it seemed the analytics and reporting capability of the chosen

provider was exactly what we were looking for. In addition we were going to be piloting the new report-ing function available. I hear a gasp…. Well so did I in all honesty. I think as we all know piloting a new product is seldom the cho-sen option. However in this constantly challenging and changing environment why not be the company to lead with it?

My next challenge is to ensure the Source to Pay aspect works as it should but also to ensure that the whole process is as easy for the requester. If you think of when you shop on line

you don’t want to progress through lots and lots of different screens in order to make a purchase, I know I don’t so why should my users have to? So my requirements are very simple, an upfront Sourcing module which covers all sourcing activities such as RFQ/RFP to eAuctions which then also links to a contracts module. An easy requisition to PO process which also links very easily with our Delegation of Approval and finally the

receipting process and the Accounts Payable module. As a company, we are very conscious of our carbon footprint and therefore look at every possibility to reduce the paper used as an organisation. Of course with the added bonus of greater efficiency, cost saving and visibility.

All of this needs to be able to provide monthly report-ing across the organisation in order to report to the UK & I Management Board. The No PO No Pay message is all across the business and the departments know there is no place to hide.

The easy part has now taken place, I now have the uphill task of the change management piece-involving and encouraging the business on how this new ERP system is going to benefit them. Across various roles I have always heard ‘ I’ve always done things this way and its worked well so far’ to ‘Not another purchasing system’. So in order to make sure I can demonstrate how they can benefit from this new system I first made sure I have gathered all the requirement and processes on how things are carried out today. This is a very important first step to any change in process. Nobody likes anyone who comes into an organisa-tion wielding a big stick telling everyone this is what WILL be done rather than working with them.

Implementing Change Management

Once all the requirements have been gathered you then need to be able to demonstrate how you can adapt and improve the ways of working into this new system. A lot of people in the business could be classed as ‘Old School’ and therefore are not as quick to embrace any change let alone new technology. Therefore by working with them very closely and demonstrating the advantages of this new system as well as how much quicker it will be as opposed to what they do today is key.S

How automating your P2P processes can drive more value from ERP system investments!

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Purchase to PayWhy Procurement, Treasury and Finance

If you’ve happened to go to any conferences cover-ing Purchase to Pay (P2P) recently, it’s likely that at some point you’d have heard, or taken part in a dis-cussion about the extent of collaboration between the different areas of finance, accounts payable (AP) and procurement. It should be obvious that if, as an organisation, you’re trying to increase efficiencies, and are perhaps in the process of better P2P workflow implementation - that the different areas of purchase to pay should function well, interact well; cross-depart-ment.

Need to run on the same track

And yet, for the most part, procurement and finance have developed separately, with different and some-times conflicting KPIs, reporting to different areas of the business – and in many organisations, now operate entrenched in their own siloes. And once some-thing becomes entrenched, it becomes part of the cul-ture, until it simply becomes “the way things are done”.

However, the downturn in the economy, coupled with increased technical capa-bilities has driven a trend towards closer co-operation. In a manual environment, finance and procurement may exist almost in isola-tion, but the truth is that the activities of each can have a related and wide-ranging impact on the organisation’s bottom line. The increased visibility that comes with the implemen-tation of technology, particularly in terms of being able to measure key metrics, has had the effect of pushing an underlying op-portunity into the daylight.

These days, those working within the different depart-ments can’t afford to view themselves as separate entities. A lighter, more agile workforce needs to use all the tools at their disposal to make sure the team runs efficiently and cost effec-tively. Of course, moving from a siloed environment to a more integrated one is never going to be a simple transition - but by far the most difficult element of the change to manage is cultural. And in a challeng-ing business environment, it’s always tempting to keep things the way they are. Involving all stakeholders, including C-Level executives at the start of the process is an essential part of the change management programme.

And yet an organisation today is far more likely than it was in the past to have a head of P2P, or a global pro-cess owner overseeing the area as a whole. And in a research piece commis-sioned by APN last year, we found that where an organisation was headed up

by someone with that remit, there was a corresponding success rate in purchase to pay functionality and collab-oration. In fact, one national bank has stated that it plans to go one step further this year, and following a successful transformation piece last year, plans to house all the areas of P2P in one area with no distinct di-visions – just one Purchase to Pay department.

While there’s still some resistance to collaboration, the results for those who see the benefits and are able to drive cultural and process change forward are apparent. As one head of P2P who was speaking at a recent APN roundtable workshop put it; “A dysfunc-tional finance team cut off from procurement is like a pantomime horse – the back end follows the front, but they’re not really sure where or why and the front is blind to whatever chaos is following in its wake.”

The simple fact is that a team which is connected works better, produces better results, saves money and has better overall visibility, which of course also helps in terms of compliance.

By Ellen LeithEditor APN

econciling supplier accounts ensures that an organisation’s supplier balances are accurate for fi-nancial reporting and profits are maximised by ensuring no credit notes are missing or invoices duplicated.

A straightforward processThe process for reconcil-ing supplier accounts is, in principle, very straightfor-ward. The supplier’s credit control department sends a statement of account, which lists the invoices on their sales ledger, to the buyer’s accounts payable depart-ment. The accounts payable team at the buying organisa-tion compare the statement to their accounts payable ledger(s) to identify any dif-ferences.

Prioritising due to time challengesHowever, accounts pay-able teams already have a full schedule managing the day-to-day activities of processing invoices through to payment. Reconciling key vendor accounts can take hours – or even days – because the statement can contain hundreds of even thousands of invoices, which need to be manu-ally checked against the accounting system.

Organisations therefore usually focus their time only on their largest suppliers to ensure that they are paid on time to avoid any supply chain disruption and ensure their liabilities are accurate for cash flow forecasting and financial reporting.

It is not practical to recon-cile every supplier, but this means that errors on state-ments are not identified, thereby reducing an organi-sation’s profits.

Technology already used in accounts payableTechnology of some kind has been used for some time by many accounts payable departments to automate invoice process-ing. Initially scanning and workflow were deployed to remove paper from the process, followed by OCR (Optical Character Recognition) to remove keying.

Supplier portals and e-invoicing networks then started to drive further adoption of electronic methods of communication between buyer and supplier, although this is still not common practice.

The additional check-pointBut even with the best controls and technology in place, invoice errors can still slip through the net. Supplier statement reconcil-iation provides an additional checkpoint; an opportunity for accounts payable to spot invoice discrepancies before they are paid and to make sure the invoice process is complete.

R

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Reconciling the supplier’s account identifies any invoices or credit notes on the supplier statement that are not on the accounts payable ledger or vice versa. It also flags invoices with data discrepancies such as incorrect invoice numbers, amounts, and currency, as well as un-paid invoices on the ledger that are not quoted on the statement despite pre-dating it.

Adding valueThis process ensures sup-plier liabilities are accurate for financial reporting and profits are maximised. Potentially more signifi-cant is that it enables the periodic clearing of accru-als on the balance sheet from goods being booked in, but no invoice having been received. By reconcil-ing supplier statements to a point in time, more of these liabilities can be cleared and returned to profit.

Statement reconciliation clearly adds value to the business, but it usually needs to be achieved with no increase in headcount. As a result, accounts pay-able are looking for automa-tion technology to do the ‘heavy lifting’. Removing the manual element of activities essential to the process ena-bles the accounts payable team to focus on resolving the exceptions, such as missing invoices/credits, miss-postings, potential duplicates and incorrect values.

Further benefit can be gained by sharing the results of reconciliations with sup-pliers thereby reducing the volume of phone calls about account status handled by accounts payable. Going one step further, offer-ing suppliers web access to their account with the facility to upload their own statements encourages them to reconcile their own account.

Cloud benefitsA cloud-based application can resolve this issue for the CFO because it ena-bles automated statement reconciliation without the need for investment in the software and infrastructure associated with on-premise applications. It also provides the opportunity to assess whether other ancillary pro-cesses can be moved to the cloud to further evaluate whether it is a viable option for other core financial ap-plications.

Automation rewardsAutomated statement reconciliation gives accounts payable another chance to identify and resolve any invoice issues, so that they are available to pay on time - or early to take advantage of early payment discount schemes. It also frees up the time of accounts payable, which enables it to focus on tasks that add value to the organisation. This raises the department’s profile due to the vital, and now visible, role it plays in ensuring that supplier liabilities are accurate and profits maximised, which keeps both the CFO and auditors happy.

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By Daniel Kimpton, Business ManagerStatement-Matching.com

Automated statement reconciliation using cloud-based technology therefore offers advantages to all parties concerned, without significant financial outlay.

All round advantages

Supplier accounts: time forautomated reconciliation?

The network rules Resolving invoice errors and exceptions is arguably the biggest challenge facing AP, and a major contributor to rising invoice processing costs. With today’s business networks, user-configurable business rules can detect errors and exceptions upon invoice receipt, without any business user interven-tion. Problem invoices are automatically rejected and returned to suppliers for correction and re-submis-sion. This eliminates invoice processing delays that can take weeks to resolve, and helps focus supplier efforts to submit correct invoices the first time, every time.

This frees up AP staff for higher value activities such as moving suppliers off paper invoicing, enforcing contract compliance, per-forming root cause analysis of recurring invoice errors, identifying early payment discount opportunities, or driving check-to-ACH payment initiatives.

By Christopher Rauen, Network and Financial Solutions - Ariba, an SAP company

By Matthew Pike, Independent P2P Consultant

Technology, Creativity and Collaboration have all contributed to a journey which has fundamentally changed the P2P landscape

Technology has changed our world.

Whilst this sentence is un-doubtedly true, it is in fact the creativity and collabo-ration of people that has actually driven the change, with technology merely acting as the platform upon which change has been able to happen. Nowhere is this more true than in the world of Purchase to Pay.

Over a decade ago, while CFOs the world over were still understanding what this new acronym- P2P- meant to them, recession and economics were also exert-ing their influence on the development of Purchase to Pay. Necessity is the mother of invention, and traditional service providers such as Finance and Procure-ment organisations were now being asked to make a greater contribution to their mother-ship’s financial well-being. And so sparked the creativity and inventive-ness of P2P’s providers, in collaboration with those CFOs, Finance Directors and Procurement Directors who were now being targeted to drive cost savings.

First came the cuts, mostly in the form of staff. The first tentative steps came as organisations pushed some procurement activi-ties out into the business, in the form of self-service purchase ordering, and

traditional AP tasks began to be driven by systems. With a lack of people, at first there was short-term pain, but the technology vendors in the P2P space responded with more advanced engines which automated the pro-cessing of invoices. After the initial pain, Procurement and Finance departments were now able to function efficiently with reduced headcount.

And with the greater reli-ance on systems came more data, which led to more in-formation and thus greater visibility, control and compli-ance. With the possibility of more granular metrics, decision-makers were now able to see which parts of the P2P process were performing badly. And so the focus for savings shifted from people to the transac-tion, identifying more ways to save and become more efficient. The technology vendors responded. Coupa came into the market with a transaction-based pricing model, and Basware and Ar-iba both invested heavily in their e-invoicing transaction model. Business Process Providers such as Capgemini charged their customers per transaction processed. So it stood to reason that every part of a transaction would come under scrutiny for cost savings.

Electronic invoices were removing postage and paper, but most importantly were saving time and thus opening up opportunities for exploitation. Matching engines were reducing time and accounts payable costs. Catalogues and automated ordering were making the purchasing operation more efficient.

Visionary organisations that focused improvements in all of these areas were now experiencing the benefits of reduced costs and signifi-cant time savings, because systems do things much quicker than humans. But ultimately, where has this led us? In its simplest terms, it has allowed these or-ganisations to pay invoices on time, and do so more efficiently.

Through their complex and enlightening metrics outputs, CFOs and their improvement specialists could now look proudly at high volumes of invoices sitting dormant in their ERP systems, doing nothing while they wait to get paid on their due date. If some-thing is sitting around doing nothing, it won’t be allowed to do so for long, even if it is just an invoice. Understand-ably, therefore, this left everyone feeling anxious for further improvement.

So Finance organisations began to question whether they could pay invoices early and achieve discounts. Dynamic discounting there-fore began to take hold; Finance and Procurement teams collaborated to nego-tiate with the supplier base to achieve greater discounts the earlier an invoice is paid. The downside of this for the Finance organisation was the negative impact on cashflow; there was cash going out of the door earlier than necessary.

The P2P vendors, no longer just technology partners, responded with a solution. The likes of Taulia, Basware and Crossflow Payments have teamed up with banks and lenders to finance the supply chain. An organisa-tion now gets to pay an invoice early at a discounted rate, but with no negative impact on cashflow. Fur-ther savings, and negligible downside.

This P2P journey has truly transformed Finance and Procurement organisa-tions. No longer are they merely service providers to the business, cost centres which drain resources. They are now profit centres in their own right, continually generating opportunities for themselves to save and make money. And it is a journey fuelled by the crea-tivity and collaboration of its players, ably supported by the technology platform.

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”“Collaboration over a business network brings new potential to accounts payable. It empowers AP with new responsibilities—turning data entry clerks into business analysts that help procurement enforce compliance and support treasury efforts to manage cash.

From Overhead to Strategic Asset

New potential for collaborationBusiness networks also en-able supplier self-service for viewing invoice and pay-ment status that eliminates payment status phone calls. Some supplier portals also offer this self-service capa-bility, but these typically re-quire separate connections for each customer, which increases the cost and complexity. A true business network provides single sign-on for all customers.

In addition, some business networks extend visibility and collaboration across a broad range of documents relating to a transaction, including purchase orders, order confirmations, and advance ship notices, along with invoices. This provides more value than an e-invoice only network.

New ways to manage cashWith the ability to acceler-ate invoice processing over a business network, organi-zations can capture virtually

all of their early payment discounts. There’s also a new form of “dynamic discounts” that opens up new discount opportunities on a sliding discount scale up to the due date of the invoice. According to Ariba customer results, average cost savings from these dis-counts come to $2 million for every $1 billion of spend. The best performers also find that about 20 percent of targeted suppliers will participate in an early pay-ment discount program.

Building the business caseIf streamlining invoice processing and procure-to-pay operations remain low priorities for your organi-zation, it’s likely that key stakeholders don’t under-stand the true cost of a business transaction. They may not know about the large number of problems invoices requiring rework or the drain on business result from off-contract spend.

Accounts Payable in the Digital Age:

In building the business case, recognize that the 60 to 80 percent cost savings from e-invoicing is just a small part of the return on investment. Even greater savings come from ex-panding early payment discounts, freeing up work-ing capital, and enforcing contract compliance.

As you embrace a business network to manage your payables, you’ll find more time allocated for business analysis, and less time devoted to data entry. This elevates the role of ac-counts payable from a cost center to a strategic asset, where AP gets recognized for making valuable contributions to bottom line results.

By Christopher Rauen, Network and Financial Solutions - Ariba, an SAP company

The Accounts Payable’s Guide to Electronic Invoicing over an Open Network

To assess the merits of a particular business network, here are some essential business requirements to consider.

Broad set of business rules for invoice validation Every network provider must have an extensive list of business rules for invoice validation to enable straight-through processing. If a business network sup-ports only a limited set of business rules, don’t make it part of your open network.

Management of a core set of business documents, not just the invoice An open network must support more than invoices. Make sure your network

Electronic invoicing over an open, interoperable business network holds great potential for organizations looking to streamline their accounts payable operations. In practice, however, not all business networks are created equal.

also supports the process-ing of related documents such as catalogs, contracts, purchase orders, order con-firmations, change orders, service entry sheets, freight line items, advance ship no-tices, payment status, and payment remittance.

With these broader capabili-ties, you can “flip” purchase orders, contracts, and service entry sheets into invoices; deliver real-time, electronic order confirma-tions and ship notices; and enable dynamic, sliding-scale discounts that help trading partners manage their cash. The inability of a network to support these capabilities will restrict a company’s e-commerce potential.

Compelling value proposi-tion to suppliers No supplier would pay fees solely for invoice delivery. Global business networks, however, expand e-com-merce potential to include publishing e-catalogs; creat-ing invoices from contracts and service entry sheets; a self-service supplier portal; and opportunities to develop new business. Networks that don’t support all these capabilities short-change your company’s suppliers and their e-com-merce initiatives.

Protecting the security of corporate data With an open network, a company’s data is only as safe as the weakest network link. That places the burden on you to know what security standards each network supports.

Equally important, you need to know where your compa-ny’s data resides, who owns that data, and how the net-work will use it. Is the data stored on a server on some-one’s desk? Can it be sold or used in some unauthorized way? Smaller network pro-viders or networks serving a narrowly focused niche may not have good answers to these questions.

Ensuring high performance and reliability With tens or hundreds of interoperable networks,

the burden falls on you to confirm the reliability, per-formance, and service levels of these networks. Smaller, regional networks may not meet your requirements for an acceptable level of network support and maintenance.

Business controls to help mitigate legal risk Ensuring tax compliance and support for country-specific e-invoice regulations are essential components of an open network. Key capa-bilities include the ability to configure business rules at the country level and sup-port for digital signatures. This latter feature is widely accepted by all tax authori-ties as proof of authenticity and integrity for e-invoicing. It places the burden of prov-ing compliance on the tax authority, not you.

This transfer of the burden of proof can’t be underes-timated. If you learn that a business network you rely on lacked adequate controls a year after the fact, you could potentially be liable for a year’s worth of taxes on transactions and the substantial penalties that go with them.

So keep this list in mind as you expand your e-com-merce network. There’s no room for compromise, as an open network is only as good as its weakest link.

”Planning to automate yourThere are several reasons why some P2P project implementations are more successful than others. Yet, if you look at some of the more successful organisations, it soon becomes apparent that regardless of any disparity between industries, the process they followed on the path to a successfully integrated P2P programme is often very similar. And if you set out some key rules to follow, the implementation is far more likely to produce the necessary results.

Develop and sell a clear and simple vision This really is key to the pro-gramme’s overall success. Get this part wrong, and it’s unlikely your project will ever get off the ground – let alone be successful. It’s all too easy to get bogged down in complexity, but that isn’t what sells. CFOs and CEOs need to know the fundamentals - what’s being used - to get what done - by when – which will save how much? An over complicated message, lacking clear goals or strategies is unlikely to win the right kind of buy-in. Above all, it’s essential that targets are clear and achievable.

Establish Executive SupportOnce you get the key members of staff on board, it’s much easier to present the solution to everyone else who’ll be affected. Get board members and key staff to sign up for the busi-ness case based on the clear vision already outlined.

Define the objectives & report regularlyHave a clear list of met-rics you intend to capture and report on them on a regular basis and at defined intervals. The provision of measurable, previously undocumented metrics is one of the key advantages in setting up an overhaul of any P2P process. The added visibility and efficiency

ultimately leads to cost savings which can also pro-tect the organisation against fraud and errors. So prior to any implementation it’s imperative to take the time to make a detailed analysis of existing systems, outlin-ing strengths and weak-nesses, listing which metrics are key to the organisation’s success and needs.

Establish waves based on best practiceRather than roll out the whole function across the entire organisation and network, break it down intowaves. The solution is far more likely to have long lasting effectiveness, and a more rapid success rate, if people are not looking at a whole range of functionality at the same time.

Once the selected areas are achieving results, it’s possible to move forward. However, it’s important to remember that just because you can, doesn’t necessarily mean you should. In other words – if you don’t need certain elements of the functionality, or to auto-mate certain procedures, then don’t. Operating a streamlined function that works and produces the results you need is more important than using a solu-tion to maximum capacity and having functions which are not used or which are confusing.

Any change takes time to come to terms with. How-ever, if those who will be most affected understandthe benefits of that change, know how to work within the new procedures and have been given theopportunity to have their opinion listened to, it’s far more likely to be well received.

Leverage the SuppliersIn the past, this was one of the main stumbling blocks to successful implementa-tion of a moreautomated P2P solution. It’s one thing to adopt new policies or automation such as e-invoicing forexample, it’s quite another to expect all your key suppli-ers to follow suit. However, with the rise inthe availability of supplier portals, suppliers are able to plug straight into the cloud solution - paid orotherwise, increasing their supply chain management along the way. The organisa-tion needs to lookinto what’s likely to work best for them - in terms of compliance, cross border transactions, size ofnetwork etc.

For organisations where suppliers can range from global corporations to one man in a van – thisnetwork can open up enormous opportunities and cost savings. Again,

effective communication is essential. Put in the effort prior to rolling out the solu-tion to make sure that it works for them firsttime, and suppliers won’t even try to get around the system. To be a success, it needs to be easy andaccurate.

Think StrategicallyIn theory, an organisation’s P2P process is simply a series of what should be relatively straightforward transactions – and yet the reality is that it’s a process which can be mired witherror and fraught with inefficiency, mostly due to a large volume of manual transactions, and in some cases subject to overpay-ments and fraud. Therefore, outlining and implementing a new P2P process makes keen business sense, and the potential is enormous. In terms of leveragingsupply chain management, having an effective P2P system can add real value to an organisation’sbottom line and having an effective P2P solution can be the “catalyst for change opportunity”. As organisa-tions become leaner, it’s the strategic thinkers who’ll be best placed to take advantage of opportunities with the agility needed to respond to them.

Purchase-to-Pay processes?

©2015, APN®. All Rights Reserved. 17 ©2015, APN®. All Rights Reserved. 18

Extract taken from APN/ITESOFT research“

Trust, Shame & Reputations - Truth & Lies in Today’s AP

It’s comforting to think that if fraud exists, it exists elsewhere – anywhere in fact other than right now - in your organisation and your own department. And in fact, it’s that assumption which makes life a whole lot easier for those hoping to embark on a life of AP crime.

Of course, no-one likes to think that someone they work with could be capable of fraud, and yet the truth is – fraud happens – and it happens quite a lot. And you’re not looking for a shady character in a badly judged mac. Statistically it’s likely to be “John” who’s worked for the company for the last 10 years. Perhaps “John” feels entitled after all the unrecognised hard work he’s put in. Perhaps it’s his way of righting a long stand-ing wrong. Who knows.. but most of all – John is doing it because he can.

Of the many high pro-file fraud cases of recent months – they have all carried some element of shock - the trusted Head of Lloyds Fraud and Security for example, or the Man-

ager of the Birmingham Dental practice involved in a £1.4m invoice fraud. Both were trusted employees with considerable access to the financial systems and the knowledge of how to navigate around them to their own advantage.

So we know that an excess of trust plays into the hands of fraudsters – but in some cases there’s another set of human emotions at play too – shame, embarrassment and perhaps corporate ego, or pride. Back in the early 2000s, I had some involve-ment with a large (and to remain nameless) organi-sation who fell victim to a series of “threshold frauds” (those where the invoices sat just within the threshold for approval). Percentage wise, the amounts were tiny – but after two years – the scheme had netted the perpetrator a consider-able fee. And although the employee was “asked to leave”, the matter was not taken further – in a damage limitation exercise for the reputation of the organisa-tion. So instead of serving as a warning to others, the fraudulent activity was swept under the carpet.

As it’s unlikely (and not particularly desirable) that we collectively decide not to trust our employees and fellow colleagues – it makes sense to adopt practices and technologies which can allow us to indulge our natural instincts while keeping appropriate checks in place. Most of the time people conducting fraud are simply taking an opportu-nity – it’s not necessarily a lifestyle choice and they’re not necessarily experts at hiding their actions. For example, many fraudsters are caught because when something works once, they’ll try it again and again until they forget to be cau-tious. Implementing a series of automation solutions can provide many of the an-swers, but only if it’s placed at the centre of a tight set of thoroughly examined pro-cedures.

Of course, a tightening of processes within ac-counts payable can have significant effects on areas other than just controlling fraud. If payments are be-ing analysed for duplicates and master supplier files are being checked for er-roneous entries and the AP manager has a new step by step process to follow from receipt of PO through to payment, analysing a series of pre-determined metrics along the way – then the cost per invoice goes down and the savings go up. All of which is good news for the business and great news for the reputation of the AP department.

By Ellen Leith, Editor APN

©2015, APN®. All Rights Reserved. 19

• Invoices from various suppliers on similar stationery• Suppliers with incorrect VAT numbers• Transactions which are out of the ordinary – ie late at night• Excessive voids or credits in the receivables ledger• Large number of invoices, especially to a particular supplier, just beneath the approvals threshold• Few, or unclear reasons for a particular service• Suppliers with PO Box addresses, home addresses etc• Erratic employee behaviour – always in early or late• Sudden, or unexplained employee departure• An increase in duplicate payments• Excessive amounts of rounded up, or down invoice amounts (frequently ending in 5 or 0)• Above average payments to a supplier

Vendor Reference Guide

Ariba is an SAP company helps its customers find opportunities to cut costs, reduce risk, and grow revenue through better collaboration with trading partners.

Basware is the global leader in cloud based e-invoicing and purchase-to-pay solutions with more than 1,000,000 users in over 60 countries. Basware’s B2B Cloud solutions and services provide an open, secure and global ecosystem for buyer and supplier collaboration, connecting more than 1.9 million buyers and suppliers globally.

CloudTrade is one of the fastest growing e-invoice networks, built firmly on the premise that e-invoicing should be free for suppliers, easy-to-use and non-disruptive – only then will suppliers move away from paper. Technical, process and commercial barriers that often exist with more traditional e-invoicing and EDI services are removed with CloudTrade, with the net result being: more paper is removed in a shorter time frame than any other e-invoicing or B2B integration approach - guaranteed.

Documation Software is a UK based company with 25 years experience of delivering document management and workflow solutions across industry and markets, and with particular experience of creating finance solutions to streamline processing in accounts payable and purchasing. www.documation.co.uk.

FISCAL Technologies is the world’s leading provider of accounts payable forensic software for corporations and government organisations to protect spend, reduce risk, cut costs and improve processes.

FISCAL’s AP Forensics® enterprise suite analyses accounts payable transactions, master supplier files and tax entries. It has been designed specifically for purchase-to-pay staff to run easily on a constant monitoring, daily or weekly basis.

ITESOFT are a multi–award winning international software vendor with an ambition to help their clients reduce costs by streamlining and automating their manual document–centric processes.

These market leading solutions are used in 22 countries world-wide and automatically process in excess of 1 billion documents every year in an accurate, fast and effective manner.

Kofax® is a leading provider of software to simplify and transform the First Mile™ of customer engagement.

Kofax TotalAgility®, combines award-winning capture, process management, data integration, mobile, e-signature and analytics capabilities into a unified smart process application development and deployment platform.

Taulia is the fastest growing SaaS platform and network for Supplier Financing, eInvoicing, and Supplier Portals. Through turning every invoice into a revenue opportunity, Taulia enables organizations to strengthen supplier relationships while adding millions to the bottom line.

Some of the most innovative brands in the world rely on Taulia, including Coca-Cola Bottling Co. Consolidated, Pfizer, John Deere, Hallmark, and many other Fortune 500 companies.

late payment penalties.

Statement-Matching.com automates supplier account reconciliations in the cloud.

Our mission is to free Accounts Payable departments from having to manually reconcile supplier statements to their accounting records, so they can focus on the exceptions and maximise the value of AP to the CFO. There is no software or hardware to install, we work with any accounting system and Statement-Matching.com is available on a free of charge four week trial.

20©2015, APN®. All Rights Reserved.

Twelve Warning Signs to Look Out For:

P2P Transformation Summit 2016

Benefit from all that the event offers:

• Two tracks: P2P Transformation and Leadership• Keynote Speaker, Joe Simpson• Eight speakers and workshops offering the latest in transformational strategy• Superb networking opportunities with like-minded peers• Excellent Waldorf buffet lunch• Afternoon tea and cakes• Champagne AP awards reception

Peak Performance, Determination to Deliver

For more details contact: P2PSummit@apn.todaywww.apn.today/events/p2p-transformation-summit.htmlFollow us on twitter: #APNTransformTelephone: 0844 870 0508

Keynote Speaker, Joe Simpson

During the keynote and workshop sessions find out how to:

• Develop the skill sets needed to become a Global Process Owner• Work with robotic process automation (RPA) • Control and evaluate P2P risk and compliance• Recognise and realise the value of supply chain finance• Drive your business forward with intelligent analytics• Define your P2P roadmap for success• Ensure change management isn’t an afterthought• Evolve and improve your technology alongside process• Align your people development with your organisations strategic values• Reconcile your KPIs to your business outcomes

Join us and discover the key steps you can take to lead your team to success

2016Summit P2P Transformation

on 7th June 2016 at The Waldorf, London