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The Children’s Place Retail Stores, Inc, ConAgra Foods, Motorola, and Pilot Travel Centers, were all honored for excellence in accounts payable automation by research and consulting firm, PayStream Advisors, last month at the annual PayStream ePayables Summit held in Charlotte, NC.
The Children’s Place Retail Stores
The Children’s Place Retail Stores award was presented to Vice President of Business Process Improvement at The Children’s Place Paul Santini. Children’s Place implemented ASPEN 360 Accounts Payable Edition from Archive Systems.
“We quickly recognized the need to automate the accounts payable process in order to increase efficiencies, reduce costs, and ensure timely payments,” said Santini.
ConAgra Foods
The ConAgra Foods award was presented to Jeff Janssen, Finance Manager at ConAgra. ConAgra chose 170 Systems to automate their processes.
According to Janssen the answer to their accounts payable dilemma centered in large part on enterprise-wide standardization, automation and improvement of underlying practices and systems.
Motorola
The Motorola award was presented to Motorola’s Senior Accounts Payable Manager Michael Riggins. Motorola conducted an extensive RFP process and chose OB10 as their e-invoicing partner.
Under Riggins’ leadership overseeing the initial technical interface, the electronic invoicing plan went live on schedule and with a nearly flawless rollover to production.
Pilot Travel Centers
The Pilot Travel Centers award was presented to Pilot’s Accounts Payable Manager, Estelle Bluhm. Electronic invoices are obtained through OB10’s supplier network and then captured within Concur Invoice for complete visibility to all invoice types.
Under Bluhm’s leadership, Pilot Travel Centers has moved from a decentralized model, where invoices were received at their more than 340 stores, to a centralized model.
PayStream Excellence Awards
PayStream Advisors’ annual excellence award honors companies for excellence and achievement in automation AP processes with electronic invoicing and imaging and workflow.
“Doing more with less” has become the mantra of the day. In the current recessionary economic environment, organizations are constantly being challenged get more done with fewer resources. Accounts Payable (AP) is no exception. AP departments now have to process more invoices and pay them faster, all with a smaller staff. And the biggest stumbling block to accomplishing this has been our continued reliance on paper-based invoices and people-based processes. We have put men on the moon and we might even colonize Mars some day, but removing paper from the finance department appears to be out of reach in the near future. Until corporate America goes completely paperless, we need a better way to manage the tons of paper that we receive every day.
Imaging & Workflow Automation
A significant shift is beginning to shake traditional AP operations, starting with the search for automation options that help them address the hassles inherent to people and paper-based activities. Our research indicates that Imaging & Workflow Automation (IWA) solutions that streamline the invoice receipt-to-pay cycle have matured and become mainstream technology. While the adoption of IWA solutions had been limited to Fortune 1000 companies until recently, we are seeing this trend trickling down to small- and medium-sized businesses owing to the following reasons:
The evolution of hosted and Software-as-a-Service (SaaS) models has significantly lowered the upfront cost of implementing AP automation solutions and reduced the hassle of maintaining them;
The convergence of electronic invoicing and front-end invoice imaging presents organizations with a single, comprehensive solution that can manage both paper and electronic invoices through a common process; and
Value-added services delivered by AP automation solution providers around supplier recruitment have allowed buyer organizations to include suppliers in their automation initiatives and change supplier behavior more efficiently.
Given this interest in IWA solutions, PayStream Advisors is developing a report titled “Imaging & Workflow Automation (IWA): The Emerging Invoice Management Revolution” for accounts payable managers, controllers, treasurers, and finance managers who are interested in exploring IWA solutions. You can download a complimentary white paper at LINK. The full Technology Insight Series report will be released in September 2009.
Full Report Highlights
Why are organizations interested in IWA solutions?
What did PayStream surveys around AP automation reveal?
What functionality is available as part of IWA solutions?
What best practices are companies using to complement technology initiatives?
Who are the key players in this market and what solutions do they offer?
How can your organization go about selecting the solution that best fits your needs?
Vendors Covered in the Report
Ariba
Banctec
Basware
Concur
EMC/170
Esker
Hyland
Imagitek
Kofax
Metafile
OpenText
ReadSoft
While Twitter might be all the rage for personal electronic communications, another phenomenon is hitting a home run in the business world. Whether it’s called Electronic Invoice Presentment and Payment (EIPP), Electronic Invoicing (e-Invoicing), Supplier Electronic Payment (SEP), or yet another name, AP automation is on the rise. And one of the most intriguing features of these newer electronic AP solutions is their ability to link buyers, suppliers, banks, and other business partners in a virtual environment.
Supplier adoption has long been on the biggest barriers to the widespread use of electronic payment solutions. But as buying organizations become more aggressive in communicating the value of these applications, an increasing number of suppliers are signing on. And once they see networking features in action, the suppliers are quickly converted, as electronic advocates eager to spread the word.
By reducing the invoice-to-pay cycle time and facilitating communications among the participants, the networks are actually enhancing corporate relationships. Buyers and suppliers can negotiate early payment discounts, resolve disputed items, and even develop complementary and mutually rewarding goals. Both buyers and suppliers can appreciate an immediate ROI in the form of increased spend management visibility and improved cash flow, including the resulting reduction in costly but often- necessary financing.
Although it may not be setting the world atwitter, the new networking is indeed changing global commerce by eliminating inefficiencies and conquering cultural, geographic and linguistic barriers.
When it was originally invented in 105 AD, paper was a precious product. Today, we just cannot imagine a world without paper. From the contents of our mailboxes to the currency in our wallets, from the rolls we use to clean our kitchen counters to the card boxes in which we get our cereal, paper is never far from the picture. And neither are our efforts to protect the environment.
While we are consciously seeking ways to reduce the impact on the environment – recycling, using renewable sources of energy and reducing waste, we cannot ignore the number of paper invoices corporate America generates each year. Here is some food for thought:
The United States alone consumes more than 82 million tons of paper each year. Though the U.S. has only 5 percent of the world’s population, it consumes 33 percent of the global paper production.
Businesses within the U.S trade in excess of 13 billion invoices annually, which accounts for more than 25 billion pieces of paper that are floating around offices each year.
Invoices are responsible for 10 percent of all trees cut down worldwide and creating paper invoices uses as much electricity each year as the consumption of 20 million households.
A year’s worth of invoices take up as much landfill space as 10 football fields each stacked more than 100 feet deep with paper.
The case for electronic invoicing has already been made in terms of time and cost savings. But the environmental impact of e-invoicing is not insignificant either. Migrating even 50 percent of our current paper invoice volume over to electronic documents can deliver the following benefits:
Getting rid of 12 billion pieces of paper means saving almost one million trees and 240,000 tons of paper every year.
Slashing paper invoicing by half also translates to reducing our carbon dioxide (CO2) footprint by almost 250,000 tons.
It is clear that, in addition to the monetary savings that e-invoicing brings, there are a number of environmental benefits as well. So make your corporate mantra “Go Green, Save Green.”
Assumptions:
• 1 million invoices = 133 trees
• 1 million invoices = 36 tons of carbdon dioxide (CO2) footprint
• 1 tree = 9,000 pieces of paper
• 1 million invoices = 20 tons of paper
Lebhar-Friedman, Inc., is the leading information company for the retail, foodservice and healthcare industries with over 350 employees located in the United States, Europe & Asia. Lebhar-Friedman is a media company, made up of business units all dedicated to providing clients with the best B2B information online and in print.
While Lebhar-Friedman is headquartered in New York City, New York, the company’s accounts payable department is located in Tampa, Florida. The AP department is supported by three full time equivalents (FTE), who are responsible for processing 28,000 invoices and expense reports annually. Most of the invoices do not have a purchase order (PO) associated with them and have to be reviewed and approved; only the IT department uses POs, so PO-based invoices are a small component of the total invoice volume.
Struggling with People and Paper
Prior to 2007, when Lebhar-Friedman was not using any automation for invoice processing, suppliers sent invoices directly to the approvers. “Invoices would be sent to field approvers in varied locations, such as New York, Chicago and Los Angeles,” said Chris Bartley, Manager of Corporate Disbursements. Approvers would review the invoices, put the required general ledger (GL) codes and then forward the invoices to the AP department in Tampa. Ms. Bartley mentioned that it was usually a week or two weeks from the time the approver received the invoice to the time the invoice made its way into AP. Not surprisingly, Lebhar-Friedman was facing a number of challenges with invoice processing:
The average invoice receipt-to-approval cycle was long and AP had to deal with missing invoices and calls from vendors inquiring about invoice status.
Manual data entry from the paper invoice into the ERP system added more time to the process.
Check runs were performed once a month and direct deposits were made weekly. If this did not coincide with when invoices were approved, the company had to deal with late payments.
AP also had to deal with a lot of exceptions. Sometimes approvers would request short payments without properly providing a reason. AP had to deal with vendors who questioned this.
Looking for a Solution
Ms. Bartley has been a regular attendee at the International Accounts Payable Professionals (IAPP) annual conferences and at these events, she got introduced to the world of imaging and workflow automation (IWA) and its associated benefits. She has been pushing the concept of invoice imaging at her organization since 1996, but budget constraints and other initiatives led to this taking a back-seat.
In 2002, she considered at least using imaging on the back-end to streamline the archival and retrieval process and started gathering internal information as well as more details on the potential vendor pool. Ms. Bartley’s persistence and her efforts at gathering information and cost justifications to present to senior management finally paid off in 2004, when the company actively explored the idea of automation and solicited requests for proposals (RFPs) from vendors.
Lebhar-Friedman had specific criteria for vendor selection. The first condition was that the solution had to integrate seamlessly with the company’s back-end Lawson and AS400 applications. Other important factors were the cost of the solution, client references and the vendor team that would be working with Lebhar-Friedman. In July 2004, the company invited five vendors to demo their solutions, narrowed it down to two by August and finally chose Perceptive Software’s ImageNow solution. The fact that Perceptive Software is a Lawson partner and tightly integrates with Lawson was a major factor in Perceptive’s favor.
Though Perceptive Software was selected in 2004, the contract was not signed until 2006 when all the stars were aligned – the CFO finally blessed the project and stated that there was availability in the budget. The project was kicked off in July 2006, with a go live date of January 2007. Ms. Bartley mentioned, “we were very impressed with the Perceptive team that worked on our implementation. The entire group was very professional and made sure our requirements were met. Our IT Director mentioned that this was the most professional team he had ever worked with”
New and Improved Process
The first step that Lebhar-Friedman took along the automation route was centralizing invoice receipt. In October 2006, prior to implementation, the company sent letters to all vendors informing that invoices should no longer be sent to the field directly, but must be received at the AP department in Tampa.
Today, the company receives about 70 percent of its invoices via email. These are sent automatically to the ImageNow printer, without having to be printed and scanned. Paper invoices are scanned into the ImageNow system. The company does not use any data extraction technologies like optical character recognition (OCR), but keys the header information into ImageNow. Invoices that have entered into the system are automatically routed to the approvers, who review the invoice, add the appropriate GL coding information and approve the invoice. Approved invoices are then uploaded and posted into the Lawson accounting application.
Reaping the Benefits of Automation
Centralization of invoice receipt, front-end imaging and automated workflow have delivered tangible benefits to Lebhar-Friedman. “A big benefit is that we now have fewer lost and missing invoices. We also have a lot less paper; while we had nine filing cabinets prior to automation, we have none now. All our invoices are stored electronically and are easily accessible. The efficiency of having all the information available at our fingertips, without having to search through multiple file cabinets is a pleasure. Finally we have been able to save a lot on storage and postage costs. Originally, we had large packages that were exchanged between the various field locations and the Tampa office frequently, we don’t have any of that anymore,” stated Ms. Bartley.
Looking Ahead…
Lebhar-Friedman is definitely interested in expanding its relationship with Perceptive Software. The company recently upgraded its Lawson financial system and also upgraded the ImageNow solution. Going forward the company is considering expanding the use of ImageNow into its human resources and payroll department. Lebhar-Friedman is also exploring the idea of leveraging Perceptive Software’s data capture solution to extract data from invoice images automatically without having to go through the manual data entry process.
Overall, the Lebhar-Friedman team is extremely satisfied with its choice and is looking forward to a more satisfying relationship.
Did you ever wonder why business-to-business transactions are typically settled in 30 days? Why not when goods or services are delivered? Ironically, the concept of trade terms were invented by the Greeks who needed a system to allow for transportation delays. In today’s economies, we have eliminated many of these delays — and drastically improved the information flows about trade. In fact, a new set of tools — Supply Chain Financing and Dynamic Discounting are rapidly changing the options around supplier payments.
Supply chain financing is demonstrating value in the weak economy as more organizations and suppliers learn how to use it, experts say. It’s most prevalent in retail and manufacturing, but ANY industry can take advantage of these tools due to the availability of new solutions. “Supply chain financing is still in the early stages”,” says Henry Ijams, managing director of PayStream Advisors research and consulting firm in Charlotte, N.C. “However, this intriguing concept is gaining lots of interest in 2009 due to the ability to extend early payments to suppliers based on the strength and credibility of the payer.”
Accelerated payments for a discount are not new. In fact, tools such as asset based lending and factoring have been in use for many years. In a factoring relationship, early payment is based largely on the credit of the vendor who’s trying to discount the receivable. With supply chain financing, whether the customer is Electrolux or Joe’s plumbing they get the same discount rate for accelerated payments. Moreover, a new internet based marketplace, called The Receivables Exchange, is now making it much easier for suppliers to access early payments from a variety of lenders.
The Receivables Exchange
This new twist to supply chain financing, Ijams says, is the concept of a non-bank third party lending the money for the supplier. For example, The Receivables Exchange www.receivablesxchange.com in New Orleans bills itself as “the world’s first electronic marketplace for trading accounts receivable.” Online, lenders that might include private individuals or hedge funds can compete to buy the invoice a major corporation has guaranteed to pay a vendor. Ijams describes the Receivables Exchange as a supplier friendly marketplace for selling receivables to investors and other lenders. “This is a brand new capital source that utilizes the Internet to facilitate transactional transparency fostered by buyer and seller ratings. Think eBay for receivables financing.”
“What we like about the Receivables Exchanges is its powerful ability to allow more people to participate in the financing of trade payables,” he says. “Our analysts think this has some powerful dynamics in 2009. While the credit markets have been disrupted, those who still have cash, like hedge funds, are looking for places to invest money.”
“Supply chain financing is becoming more significant as invoices are approved faster with automated matching and workflow,” he says. So far, the concept seems to be a win-win for everyone involved. “With SCF, once AP has approved a payable, and know they’re going to make payment, the buyers shouldn’t care if someone else is using a promise to pay to swap that for early payment. In fact, buyers should promote the use of SCF because it means someone else can potentially lend that supplier money at lower risk and zero cost to us, the payer.”
Future trends
Finance professionals need to stay up to date with the trends happening in supply chain financing – including its “cousin,” dynamic discount management, says Ijams. The concept involves paying suppliers early in exchange for an attractive discount, which lowers the cost to the organization. It goes against the old adage “Collect early and pay late.”
Staying ahead
The changes in trade payables present a major opportunity for AR, Billing Managers and AP departments to shine, Ijams says. “Innovative billing and treasury managers must continue to insert themselves into finance opportunities to help their companies find ways to speed up the invoice approval and cash receipt processes. Effective collection strategies will be based on a continued contraction of the invoice-to-approval time.”
Research by PayStream Advisors shows the average approval time for invoices (from Invoice Date to posting or approval date) for F1000 businesses is 20 days. That leaves only 10 days of potential early payment time for a supplier, minimizing the opportunity for early payment, he says.
Many organizations will not realize how supply chain financing can serve them until innovative finance professionals bring it to the forefront, Ijams says. “It’s a way for finance and treasury managers to heighten their credibility and improve their importance in the organization. … in order to be a value-added players, today’s finance managers have to be the eyes and ears of an organization by looking for new opportunities to focus billing and collections organizations on continuous improvement.
As the dust begins to settle from PayStream’s first annual electronic invoicing summit, The Next Generation of E-Payables: Electronic Invoicing and Supply Chain Finance, and before I go back to work on our Spring Summit 2009, I thought I’d take a few minutes to reflect on the week’s events.
The inspiration for the Summit was PayStream’s consulting, research reports, and one specific study our research division has been conducting for the last several months regarding the state of AP automation in U. S. companies. The findings were unveiled at the Summit and the eInvoicing Adoption Survey Report released this week. LINK
Common themes emerged from the conference delegates. Many admitted that imaging and OCR were great first steps, but they found it was time to take their AP departments to the next level in automation and to begin exploring advanced options like electronic invoicing.
Organizations just getting started on the path to automation expressed relief when they discovered many of the options that technology providers offered could be tailored and implemented a la carte.You don’t have to automate the entire process all at once.
Of course, everyone wants to know how to make the implementation process a success, but making that happen depends on variables, often times out of your control. This was addressed in the morning panel discussions when panelists offered anecdotes for how to be successful.
The moral of the stories was: 1. Executive sponsorship and cross departmental collaboration is key. You need all departments on board and you need your executive leadership to fully understand and support the project to have any chance of automating your accounts payable, and 2. Take time prior to implementation to get an accurate estimate of the current state of your payables, even if this means stretching your timeline an additional 3-6 months.
And the question addressed most often; how do we get our suppliers on board? The answer was a unanimous recommendation to approach your vendor pool with an air of collaboration and be willing to work with individual vendors who may be on separate platforms.Often times, a solution provider will handle supplier on-boarding for you.
Now, getting back to the survey results from the PayStream eInvoicing Adoption Survey Report. Amid all the findings, we see most clearly that paper is on the way out and it’s on the way out fast. By 2010 we anticipate electronic invoices exceeding the number of paper invoices processed by Fortune 500 companies in the U. S.
REPORT: Eight Building Blocks of Invoice Automation, Supply Chain Finance & Discount Management
AP Automation including Invoice Automation and Discount Management (IADM) initiatives need a framework to ensure that programs are approached on a strategic basis which bridges both the Supply Chain and Finance organizations. PayStream’s analysts have introduced such a framework to help enterprises implement integrated IADM and maximize benefits.
To achieve the long-term value of Invoice Automation & Discount Management (IADM), organizations need to adopt a strategy involving both Procurement and Finance and therefore initiatives should be approached at an enterprise level. So far, only a limited number of enterprises have stepped up to this challenge and are implementing what PayStream Advisors calls integrated IADM optimization. This number is steadily rising, as corporate enterprises begin to achieve benefits in their first attempts at IADM and realize what really needs to be done. Our most recent research survey that many enterprises are still implementing electronic invoicing or stand alone Discount Management or Supply Chain Finance programs, not truly integrated projects.
When companies focus on planning, as opposed to implementation, PayStream estimates that:
Nearly 30 percent of surveyed enterprises have plans that would fit the integrated IADM description.
Approximately 50 percent of those are planning a Level I approach (not integrated)
Less than 20 percent are planning an integrated approach which brings together buyer/supplier collaboration with electronic invoicing.
More than 15 percent are considering global initiatives to inject third party financing into their supply chains
Integrating Invoice Automation and Advanced Finance Tools such as Dynamic Discount Management or Supply Chain Finance is not easy. It requires a multi-disciplinary vision and leadership to drive a focus on unleashing working capital from the trade Invoice and receivables, otherwise it will remain fragmented. It involves difficult changes to processes, and external organization that can make implementation difficult. Organizational and cultural barriers exist between Supply Chain/Procurement and Finance managers making clear thinking on IADM difficult.
The technology support seems easy but it isn’t. Technology staff must grapple with the challenges of getting invoices approved faster, multichannel alignment, and systems integration. Even if the CFO accepts the need for enterprise-level IADM, the quarterly demands of procurement and working capital targets, especially in delicate economic conditions, make IADM one of the the most important challenge facing the finance organization, but not the most urgent for the CFO. This typically results in a focus on tactical quick wins until conditions are better.The main reason enterprises are not implementing integrated IADM is an inability to see the big picture and understand what is involved.
Just as a map helps you understand the context of your journey (the roads you need to navigate and alternative routes), so the PayStream IADM framework helps enterprises make decisions about the best route and objectives for their situation.
Following an analysis of several larger corporate enterprises, PayStream Advisors has created a IADM framework, or map, called “The Eight Building Blocks of Invoice Automation and Discount Management (see Figure 1) to help enterprises see the big picture, make their business cases and plan their implementation. The framework can be used for internal education and debate in developing the IADM vision and IADM strategies. It can then be the basis of an assessment of the enterprise’s current and required IADM capabilities, to help understand its current position and future strategy.
Using this framework, PayStream Advisors is currently profiling several enterprises that are great examples of IADM at work.
Core Topic
Supply Chain Financing: Optimizing Working Capital through the strategic use of financing and discounting in the supply chain
Key Issues
During the next five years, how will cash management strategies, processes and technologies evolve to enable enterprises to improve the use of working capital tied up in trade Invoice and receivables?
What is IADM, how will it evolve, and what drivers are emerging to force its adoption?
What is the senior finance executives in successful IADM initiatives?
Strategic Planning Assumptions
Through 2008, 90 percent of successful IADM initiatives will balance the needs of improved supplier relationships with working capital improvements Enterprises that have a wide differential between their and their suppliers cost of capital are twice as likely to achieve adopt IADM and Discount Management goals.PayStream’s Building Blocks research and report will be released at the September 10-12th PayStream Summit, in Orlando, FL. Those finance and supply chain managers whom desire the latest information, tools and techniques in Invoice Automation and Discount Management should reserve their delegate representation at the conference
It’s sobering to think about the demise of Bear Stearns, the collapse of several regional banks, and the plummeting stock prices of larger financial institutions. Tech-savvy companies have discovered a relatively untapped revenue source – supplier electronic payments.
PayStream’s analysts note that labor accounts for the vast majority of all invoicing costs, because of time spent manually creating and mailing invoices, answering questions, managing payment disputes, and correcting errors. Although it often goes unrecognized, another significant cost in accounts receivables is payment lag time. In large companies with high volumes, the processing cycle can last three weeks or more. Those delays are costly, both in terms of lost trade discounts and unearned interest on money that could have been invested during that time.
Today’s virtual invoice and payment solutions not only process payments, they can create electronic invoices from accounts receivable systems, present invoices online, or send invoices directly to recipients’ systems. In addition to faster invoice processing with fewer errors, these solutions also offer savings in time, postage, and paper storage; improved capture of early payment discounts; and online dispute management “ not to mention an improved bottom line. PayStream’s latest report, Supplier Electronic Payments: Understanding Business to Business payment automation solutions reveals that companies can save up to $8.00 per payment by simply by moving from check to electronic payments Download a copy of the complementary report. DOWNLOAD NOW >>
Buyers searching for a way to eliminate the hassle of inbound paper A/P invoices have a few options to choose from. EDI has existed for years. E-Invoicing networks grabbed the spotlight in the late 1990s. Finally a resurgence of OCR has taken place. The reality is all of these offerings continue to leave Buyers wanting. The main challenge – slow Vendor adoption. For those looking to compliment an existing solution that has only removed a portion of the inbound paper or for those looking at an electronic invoicing project for the first time, our upcoming Nov. 14th webcast should help you understand your options.