Electronic Billing and Payments

Transcription

1 Executive Report Electronic Billing and Payments PUBLISHED by SPONSORED by

2

3 EXECUTIVE REPORT By Jeffrey Pape Breaking Down the Barriers to Payment Automation The vast majority of middle-tolarge-scale organizations are now using electronic payments to at least some degree. Research by PayStream Advisors released in August 2013 shows 27 percent of the organizations surveyed reported significant automation investments, and another 33 percent reported having some advanced technology. By contrast, only 4 percent said they had no automation and no plans to automate, according to the report, Buyers Guide to B2B Payment Automation Solutions. Even so, data released by the Remittance Coalition as recently as 2012 shows that paper checks have yet to fall below 50 percent of business-to-business payments. Paper has yet to retreat quietly into the night. In other words, when it comes to optimizing electronic payment tools, many organizations are not nearly as far along as they could be. Organizations will not realize maximum financial and efficiency benefits from their e-payment systems unless the barriers to using them come down. Fortunately, that is beginning to happen. Let s examine the obstacles one by one. Suppliers may be more receptive than you think When we at U.S. Bank conduct an accounts payable analysis with one of our clients, we consistently find instances of paper checks being used to pay suppliers who accept card payments. Sometimes we find one department paying a supplier by check while another pays the same supplier by card. The lesson to be learned is that change in the payment landscape is rapid and ongoing. What a supplier may have said about not accepting cards in the past even the very recent past might be different today. If you as a buyer haven t undergone an AP analysis with your banking partner lately, ask for one now. Advances in IT integration The technical challenge of integrating a buyer s enterprise resource planning (ERP) software with that of its payment provider can discourage organizations from automating. Many simply don t have the IT resources to invest in creating the multiple file formats and custom interfaces needed. Banks and other payment providers recognize this and are tackling the issue head-on. Many offer data mapping services that do most of the heavy lifting of integrating among the various ERPs, home-grown and legacy applications, spreadsheets, and flat files. Such turnkey solutions often require little to no investment from the client, other than perhaps a minimum level of annual spending. U.S. Bank advanced IT integration a giant step further with the July 2013 introduction of the SAP Consolidated Payables Link for U.S. Bank application. Customers who use SAP as their ERP provider no longer need to develop separate formats and custom interfaces between U.S. Bank and their ERP system. They can download an app from the SAP Marketplace and let the app automatically format all the necessary elements for ACH, wire, check, or virtual card. This reduces the cost of getting started and the time it takes to do so. Easing reconciliation woes Single-use accounts with exact authorization controls are another recent development on the e-payments landscape. Such tools ensure buyers have complete control over the amount they authorize for a payment down to the penny. A seller cannot take a penny more, or a penny less, than what is authorized. At first blush, it wouldn t seem like cause for complaint when a seller takes less money than the buyer intended to pay. But the time and cost of reconciling unmatched payments after the fact can be a major headache for buyers. For example, if a buyer sends an electronic payment for $100, and the seller decides to take just $80 because of a $20 credit with the buyer connected to a completely separate transaction, it might even up the books for the seller, but it leaves a discrepancy for the buyer. You can t cash a check for less than what s written on it, and you shouldn t be able to do it with electronic payment, either. Exact authorization controls allow buyers to work with their suppliers on such issues before the payment happens. Never a better time to automate With more and more suppliers accepting e-payments, with innovations empowering buyers to take greater control over their processes, and with technology barriers falling by the day, payment automation is poised to accelerate in the next three years. For organizations looking to migrate more transactions to their card programs, no less than for organizations considering their first move in that direction, there is no better time to act than today. Take the first step: Contact your banker. Jeff Pape is a senior vice president whose responsibilities include leading the strategic development of commercial cards, emerging payables products, healthcare and supply chain finance solutions for U.S. Bank s business-to-business customers. Executive Report Fourth Quarter 2013 The Institute of Financial Operations 3

4 EXECUTIVE REPORT By Amy Radke From ink to incredibly efficient: The automated CFO Technology changes your job, even when you don t. I ve been a senior financial leader for a number of years for different companies of various sizes, and even though my needs related to managing accounts payable have not changed, what I m able to accomplish as a result of more efficient processes has greatly improved my effectiveness as a leader. When I began working, paper was just a fact of life, filing cabinets were a regular office fixture, and everyone accepted the timeconsuming, manual processes associated with invoices and payments. When I started with AvidXchange three years ago, their AP processes were already automated, and I appreciated the ease of audits and month-end closings. When our auditors come to visit, we literally let them log into our portal and research any invoices they test in our SaaS-based (software-as-a-service) solution, and we continue our daily tasks. Working for an AP and payment automation company as a CFO is extremely interesting, because while I am an employee, our finance team is also a client. We became an integral part of the development team, offering feedback to the payment process we were automating. The inefficiencies we experienced in our paperbased payment process had similarities to what we had previously addressed with AP automation. The efficiencies we have added to payments remove the paper processes and the redundant tasks, such as signing checks or printing and mailing them. Regardless of the type of company, we have provided a method to accomplish the basics more efficiently with the same, or better, controls. One of the best features our bill payment service offers is called payment control, which mimics the approval process I had when we were using paper checks in a more efficient manner. When we established the payment approval workflow, we based approvals on thresholds, so rather than relying on a person to manually identify who should see a check before it goes out the door and whose signature the check needs, the software automatically routes it every time. When providing guidance for development, we made sure the development team understood how imperative it was to build a system that could mirror a company s current controls and provide the functionality necessary to facilitate them. As finance professionals, we rely on our system to enforce a process so that controls can scale for growth. One of the caveats to converting to automated processes is first understanding the definitions of AP and payment automation. As service providers, we know our job is to highlight efficiencies in areas where companies have never realized they could cut costs or live without paper. At AvidXchange, we believe we need to be educators as much as automators. Understanding the value in both monetary and time savings is imperative when making the decision to automate. It s also paramount that the person advocating the change in the organization is able to articulate how automation will benefit employees at every level of the organization for buy-in from decision-makers and, later on, to foster successful change management. The key is to realize the ROI upfront, and not to forget some of the things you can t fit into a spreadsheet, like employee job satisfaction. Our job educating the market about AP and payment automation has become somewhat easier as competitors emerge and the concept of automating doesn t seem so foreign. Since we ve entered the payment market, we have seen the number of competitors steadily increase, which challenges everyone to think more creatively and develop solutions that continue to address new problems for clients. 4 Executive Report Fourth Quarter 2013 The Institute of Financial Operations

5 The word is getting out about automation, and more CFOs are joining me in going paperless than ever before. In fact, the majority of the respondents to The Institute of Financial Operations 2012 AP Automation Study (67.5 percent) reported processing more business-to-business payments electronically compared with three years ago. Two of the biggest questions I feel I have asked myself throughout my career are, How do you manage data in an intelligent fashion? and How can we do more with less? The first question is addressed with automation, and particularly a solution based on SaaS. Having a cloud-based offering gives everyone access to the same real-time data from anywhere. The integration we offer with our clients accounting systems enables everyone in all departments to look at the same data when performing daily tasks, developing budgets or projections, and researching financials. A major challenge in a paper-based environment is disseminating information across the company so that everyone is looking at the same thing. Automation ensures the data is consistent across users. The second question is also addressed with automation, because by removing manual tasks from AP and payment processes, you are able to facilitate growth in invoice and payment volume without the need to hire additional staff. After you transition to an automated process, all of your company s existing employees have additional time to focus on high-value responsibilities rather than manual tasks such as entering data, opening the mail, and printing checks. On our team, we have more time to perform strategic tasks for budgeting and forecasting and also have all of the financial data right at our fingertips for analysis. This helps us make data-driven decisions that will foster long-term profitability and success. Our company is currently in high growth mode, and it s essential that our projections are correct so we can hire appropriately and invest in the right areas. I m also a huge proponent of work-life balance, and working for an automated company gives me an amazing amount of freedom. I don t physically have to be in the office to approve an invoice or sign a check; I can approve invoices and payments from anywhere as long as I have an Internet connection. I like my life as an automated CFO, because it gives me the freedom to be a dynamic leader who can help every area of the company make financially sound decisions with reliable data. It s great to see so many people in my same role transitioning to automated processes, because I know firsthand how much it will empower them. I don t miss checks. I m happy to reserve my signature for coworkers birthday cards. Amy Radke has been a senior accounting and financial leader for more than 20 years. Her experience was primarily in the telecommunications industry prior to joining AvidXchange in 2011 as its chief financial officer. She was one of the original members of the executive team with US LEC, and she played an active role in the company s rise from a $10 million to a $440 million company. Her responsibilities there as chief accounting officer included SEC compliance reporting for the publicly traded company, and she gained significant experience in oversight of financial risk management and Sarbanes-Oxley compliance. Radke previously worked as a financial reporting manager for MCI Telecommunications. She also worked six years in public accounting, three of them with McGladrey & Pullen. Radke holds a bachelor s degree in accounting and finance from the University of Colorado, is a licensed CPA, and is a member of the American Institute of Certified Public Accountants. Executive Report Fourth Quarter 2013 The Institute of Financial Operations 5

6 EXECUTIVE REPORT Executive Reports from The Institute of Financial Operations Showcase your company as a thought leader in financial operations by providing an article written by your organization and published in one of our 2014 Executive Reports. Each Executive Report is printed and mailed with the award-winning Financial Ops magazine, posted and archived on the news portal of The Institute s website, and distributed at trade shows throughout the year Executive Report Topics First Quarter, 2014 Big Data in Finance Contact us immediately to reserve space Second Quarter, 2014 (two reports) AP and AR Automation T&E Expense Management Content due: Feb. 14, 2014 Third Quarter, 2014 P-Card Programs Content due: May 15, 2014 Fourth Quarter, 2014 (two reports) Business Process Outsourcing Lockbox Trends Content due: Aug. 15, 2014 One page (600 words) $1,500 Two pages (1,500 words) $2,000 Three pages (2,200 words) $3,000 Editorial assistance is available for an additional fee. Reach 5,000-plus financial operations professionals ROI Greater visibility for company leaders Company positioned as subject authority Ongoing brand presence on website 6 Executive Report Fourth Quarter 2013 The Institute of Financial Operations

7 Connect with Us Josh Gold, CAE, CMP Vice President, Business Development Tel: Cindi Occhuizzo Director, Business Development Tel: Tina Kidd Director, Partnerships and Exhibitor Services Tel: Address: 940 North Fern Creek Ave. Orlando, FL Website: FinancialOps.org Phone: Fax: Executive Report Fourth Quarter 2013 The Institute of Financial Operations 7

8