THE STATE OF B2B PAYMENTS 2017

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1 May 7-9, 2017 Disney s Yacht & Beach Club Resorts, Florida THE STATE OF B2B PAYMENTS 2017 Andrew Bartolini Chief Research Officer Ardent Partners May 9, 2017

ANDREW BARTOLINI Chief Research Officer, Ardent Partners 11+ years as an industry analyst Researched and published extensively across all aspects of supply management Benchmarked thousands of

2 ANDREW BARTOLINI Chief Research Officer, Ardent Partners 11+ years as an industry analyst Researched and published extensively across all aspects of supply management Benchmarked thousands of distinct procurement and AP departments 6+ years at Ariba and Commerce One Rich experience in product marketing/management and systems implementation, strategic sourcing, business process transformation Prior work history in consulting and investment banking MBA, Finance Indiana University BA, Economics College of the Holy Cross

3 ARDENT PARTNERS: RESEARCH WITH RESULTS

4 PAYABLES PLACE THE GLOBAL SOURCE FOR AP NEWS, RESEARCH, & ANALYSIS

5 THE STATE OF EPAYABLES 2017 REPORT COMING THIS MAY This report. presents a comprehensive, industrywide view into what is happening in the world of AP captures the experience, performance, perspectives, and intentions of ~200 AP, finance, and P2P professionals makes a series of recommendations for AP teams looking improve delivers the 2017 AP Operational and Performance Benchmarks

6 TODAY S AGENDA Introduction The State of the AP Market in 2017 The State of epayments The Next Generation of epayments Strategies for Success Q&A

7 THE STATE OF THE AP MARKET IN 2017

8 THE LEGACY VIEW OF ACCOUNTS PAYABLE Tactically focused Emphasize invoice processing No involvement in strategic planning Manual payments

9 THE NEW PERCEPTION OF AP How strategically valuable is AP? 15% Involved in strategic activities 33% 18% Tighter collaboration with partners 34% Ardent Partners Exceptionally valuable; extensive collaborator Very valuable; heavily involved in fin ops Somewhat valuable; occasional collaborator Not strategic; tactical processor Viewed as a partner More important to the enterprise

10 WHAT ARE AP S OPERATIONAL CAPABILITIES? Automatic invoice routing Standard AP processes Ability to measure key AP metrics 2- or 3- way matching Straightthrough invoice processing

11 WHAT DOES AP PRIORITIZE TODAY? Reducing processing costs (41%) Increasing visibility into invoice / payment data (40%)

12 WHAT DOES AP PRIORITIZE TODAY? Improving reporting and analytics around AP (28%) Expanding collaboration with suppliers (26%) or procurement (24%)

13 WHAT ARE AP S GOALS? Automate more AP processes (55%) Improve collaboration / process linkage between AP & Procurement (40%) Reduce operational costs (35%) Make AP more strategic and agile (34%)

14 VISIBILITY Given that AP is fundamentally a cash-distribution function, more visibility into and control over supplier payments can add additional data to craft a more detailed cash management strategy.

15 WHAT CHALLENGES DOES AP FACE? Delay in receiving (or lack of) matching information High invoice processing costs High percentage of exceptions Invoice/payment approvals take too long Getting the budget to invest in automation

16 EXPECTED CHANGES IN AP, NEXT TWO YEARS 86% 51% 49% AP staff will move away from manual tasks AP will play a key role in supply chain finance AP will have increased involvement in cash management / working capital optimization Ardent Partners

17 THE STATE OF B2B PAYMENTS

18 EPAYMENTS RISING Key Takeaways: No company wants to slow the line epayments are easier epayments are cheaper epayments are more accurate epayments are more secure

19 THE RISING PROMINENCE OF EPAYMENTS Ardent Partners % 63% Electronic Payment (epayment) Paper check or manual payment

20 THE TOP PRIORITIES FOR B2B PAYMENTS Improve reporting and analytics around AP Reduce processing costs 36% 39% Improve supplier connectivity Improve visibility into payment data Extend payment terms / optimize DPO Increase commercial card rebates 18% 27% 25% 23% Ardent Partners Copyright Ardent Partners Ltd.

21 WHY B2B PAYMENTS MATTER TO AP (Top AP Business Pressures shown Below) Automate more AP processes Improve collaboration & process linkage Reduce operational costs Make AP more strategic Copyright Ardent Partners Ltd.

22 TOP PAYMENT-RELATED CHALLENGES Lack of visibility into payment data 34% Payment approvals take too long 27% Getting the budget to invest in automation 22% Late supplier payments 18%

THE BENEFITS OF ELECTRONIC PAYMENTS 23% of all AP groups

23% 45% 51% 51% of enterprises rate cost savings as the

groups say that electronic payments enable more efficient

23 THE BENEFITS OF ELECTRONIC PAYMENTS 23% of all AP groups report increased accuracy and control of payment delivery 23% 45% 51% 51% of enterprises rate cost savings as the top benefit seen from electronic payments 45% of AP groups say that electronic payments enable more efficient and streamlined processing (e.g., review, approval, execution). 23

24 THE NEXT GENERATION OF EPAYMENTS

25 ARDENT PARTNERS EPAYABLES FRAMEWORK

26 ELECTRONIC PAYMENTS A majority of suppliers (52%) are now willing to accept payment electronically, which is the highest percentage Ardent Partners has ever seen in the decade plus its analysts have conducted AP-focused research.

27 TOP BARRIERS TO EPAYMENT ADOPTION Supplier doesn t possess technology to participate Lack of integration between electronic payments and accounting systems Difficult to convince suppliers to accept electronic payments Obtaining/maintaining supplier banking information Costs borne by the supplier (e.g. card fees)

early payment discounts Ability to measure key AP metrics

28 B2B PAYMENT CAPABILITIES Ability to make electronic payments Ability to provide rich remittance information Ability to efficiently capture early payment discounts Ability to measure key AP metrics Tools/programs/processes that help optimize working capital Supply chain finance program

29 REMITTANCE CAPABILITIES 1. Structured and standardized remittance information 2. Submission of remittance information together with electronic payments 3. Standardized reconciliation of remittance information 4. Remittance information that automatically links back to POs and invoices 5. Standardized remittance information as a means for improving straight-through processing 6. Initiatives to improve how AP handles or manages remittance information

30 THE EPAYMENTS TECHNOLOGY LANDSCAPE Automated Clearing House Wire Transfers

31 THE EPAYMENTS TECHNOLOGY LANDSCAPE Commercial Cards Business/Payment Networks

32 THE EPAYMENTS TECHNOLOGY LANDSCAPE Supply Chain Finance Dynamic Discounting

33 UNDERSTANDING KEY AP PERFORMANCE METRICS Without an understanding of baseline operations, such as average per-payment cost and processing cycle time, there is no way to determine whether a given payment automation project has actually benefitted the organization or not.

34 BEST-IN-CLASS B2B PAYMENT PERFORMANCE Metrics Cost per Payment % of Suppliers Accepting epayments % of Suppliers Participating in Discounting Program Straight-through Processing (% of invoices) Best-in-Class All Others Ardent Partners

35 STRATEGIES FOR SUCCESS

36 KEY BUSINESS TRENDS IN 2017 (WHY THE MARKET IS READY FOR EPAYMENTS) Collaboration Visibility Fast/Better Suppliers Optimize Payment Payments = Decisions Partners Status Agility Cash End-to-End Processes Copyright Ardent Partners Ltd. Ltd.

37 STRATEGIES FOR SUCCESS #1 Take a holistic view of the AP process Include payments as part of transformation and improvement area #2 Build a tight connection to Treasury If AP can provide valuable supplier payment data to Treasury, they can start to show its strategic value #3 Develop analytical capabilities This will help turn payment information into business value

38 STRATEGIES FOR SUCCESS #4 Evangelizing the value of epayments The emerging business value of epayments affects not only AP, but Procurement, Treasury, the internal audit team, and even executive leadership #5 Improve remittance delivery capability Supplier reticence is a barrier to epayments. Rich remittance information is one of the clearest ways to address this problem #6 epayments transformation is a journey It is important for teams to set multi-year goals for any B2B payment transformation project, including epayment volumes and supplier enablement percentages

39 Q&A Contact Info: Ardent s Media Sites: Andrew Bartolini Managing Partner & Chief Research Officer For more information please visit:

CPO RISING 2018: THE AGE OF INTELLIGENCE. Andrew Bartolini, Founder & Chief Research Officer Ardent Partners April 26, 2018

CPO RISING 2018: THE AGE OF INTELLIGENCE Andrew Bartolini, Founder & Chief Research Officer Ardent Partners April 26, 2018 1 TODAY S MODERATOR Matthew York Editor of CPO Rising & Research Analyst, Ardent