The Top 10 Mistakes in Accounts Payable and How to Avoid Them Dean Baxter Sales Director 339-293-9970 [email protected] www.basware.com/us EPP Challenges in Organizations Control & Compliance Cost Savings Organizational Efficiency Approval policies inconsistent and/or not followed High cost of accounts payable process Personnel waste time on transactional issues No records of invoice history, no audit trail Cash discounts unused, late payments boost unnecessary costs More time needed for value-added activities No real-time view on cash flow Best practices in AP process not known or implemented Overall process of compliance with SOX, IAS... The Top 10 Mistakes in Accounts Payable And How to Avoid Them Shuffle Paper for Approval of Invoices Shuffle Paper for Invoice Approval Problems  Photocopying of Invoices  Tracking of Invoices in Process  Faxing of Invoices  Temporary Filing of Invoices in AP Pay Late Fees or Not Take Advantage of Favorable Early Pay Discounts Invoice Processing Cycle Times Cycle Time (from invoice receipt to payment scheduled) Best-in-class All Others Overall invoice average 5.8 days 14.1 days Non-exceptions 6.0 days 11.2 days Exceptions 9.4 days 16.6 days Source: Aberdeen Group: The CFO’s View of Accounts Payable: Cash is King. February 2009 Not Having Visibility of Unrecorded Liabilities Unrecorded Liabilities Problems  Not Able to Perform Accruals on Actual Liabilities  Creates Cash Flow Management Challenges  Reporting Issues  Reporting on estimates  Adjusting based on actual Cash Management Report Believing EDI or e-Invoicing is the Path to an Immediately Paperless AP process EDI or E-invoicing=Paperless?? Problems  EDI is a Recommend Format not a Fixed Format  EDI Typically Requires IT Involvement on Both Sides  e-Invoicing  Vendor Portals Work When Vendors Produce Small Volumes of Invoices or High Dollar Invoices Spend More Processing an Invoice Than the Amount of the Invoice Cost per Invoice: Aberdeen Group Source: Aberdeen Group: The CFO’s View of Accounts Payable: Cash is King. February 2009 High Cost of Processing an Invoice Problems  Courier Costs  Manual Data Entry  Manual Matching  Manual Exception Handling  Manual Approval  Labor Spent Tracking Invoices Internally  Responding to Vendor/Internal Requests Be Involved With Why the CFO is Walking Out in Handcuffs Audits and Compliance Problems  Must Have an Auditable and Repeatable Business Process  Auditors Always Seem to Want the One Invoice You Can’t Find or Mishandled  Fraud  Store your invoice, check images, or remittance documents in multiple locations or media making audits painful and expensive Neglect to Coordinate with Finance, Procurement and IT Stakeholder Interests End-users Line-of-Business Budget Holders – – – – – – Getting things done, quickly and easily Obtaining necessary items Accessing up-to-date information on one’s own requisitions Tracking business performance Achieving complete spend control Enabling real-time budget follow-up Procurement Finance – – – – – Spend and category management Contract management and use Eliminating maverick buying Streamlining standard transactions – – Gaining real-time data on spend vs. budget Transparent reporting Minimizing manual work, automating invoice handling Successful implementation requires addressing the interests of all stakeholders Failure to Coordinate Problems  Disjointed Processes  Longer cycle times and more exception handling  In-fighting and finger pointing  Systems that do not communicate  Vendor relations can suffer Become a Call Center/Service Center for Vendor and Internal Requests Call Center/Service Center Problems  Interrupts the Core Work of Accounts Payable Professionals  Typically Requires Research and Then an Additional Follow Up Call  Even Research Does Not Always Answer Request  If the invoice is not in the AP process it is difficult to locate Personal Archive for Reviewers/Approvers Supplier Portal for invoice and payment Have Company Operations Interrupted or Halted Due to Non-payment of an Invoice Core Business Interrupted USA TODAY January 1, 2008 Core Business Interrupted Problems  Production Stops  If required goods and services being provided by vendors are placed on hold it can cause down stream issues.  Missed Revenue  Gets Executive Attention Fast Manually Enter Invoice Data Into Your ERP System Manual Data Entry Problems  High Cost to Manually Enter Required Fields  Most organizations do not capture line item detail due to this  Accuracy Issues  AP processors Least Favorite Task Possible Solutions Possible Solutions - Imaging  Scan the Invoice as Early as Possible  Distributed or Centralized  Leverage Existing Technologies for Capture  Multifunction Copy/Scan/Fax devices  Creates Immediate Audit Trail  OCR (Optical Character Recognition)  Significantly Reduce Data Entry  Increase Accuracy  Outsource the capture process  Many providers are high volume “machines” that provide quality work at reasonable prices Possible Solutions – Paperless Invoicing  EDI  Work with Large Volume Vendors to Create Connections  e-Invoicing  Vendor/Supplier Portals  Easy to implement if you are a Fortune 50  Works well with small suppliers or large $ invoices  Work with an e-Invoicing Network  Takes time to create a substantial volume but is cost effective  Network provider perform all the hard work Possible Solutions – Workflow/Content Management  Facilitates Routing of Invoices     Cash Flow Management Automated Matching Exception Handling Approvals  Review processes very carefully  Creates Audit Trail  Electronic Stores Invoices and Supporting Docs  Eliminate Paper Filing  Allows Business Users to Retrieve Invoices Basware in Brief Basware in Brief  A Global Leader in Enterprise Purchase to Pay solutions   Established in 1985  1,500 customers and 1 million users in 50+ countries  Public company with rapid and profitable growth  35 Purchase Management, Invoice Automation and Document Archiving Solutions 2009 revenue of $140+ million  Over 800 employees worldwide  AAA D&B Rating  Listed in Deloitte’s Fast 500 Technology Companies  Global coverage with operations in North America, Europe and Asia-Pacific  US headquarters in Stamford, CT and offices around the USA  Partners across USA  Certified SAP, Oracle, and Microsoft partner Basware EPP environment Suppliers Basware Connectivity Supplier Catalog Exchange Purchase Message Exchange Procurement Scan and Capture E-invoice Exchange Invoice Automation Customer Legacy Systems e.g. Financial Systems, ERP KPI Measurement and Continuous Improvement Forrester Wave™: AP-EIPP, Q2 ’08 Basware North American Customers BasWare Enterprise Purchase to Pay Q&A Dean Baxter Sales Director (339) 293 9970 [email protected] www.basware.com/us