Introduction. Table of Contents

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Neal McCormick
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2 Introduction To stay competitive, you know how important it is to find new ways to streamline and save on your company s operations. Learning how leading companies handle commercial payments can give you deeper insights into where and how you can improve. Help you understand how to run your Procure-to-Pay processes more efficiently. Enhance visibility into corporate spend. Gain better control and compliance. And ultimately, help enable you to add more profit to your bottom line. Visa commissioned Deloitte Consulting to conduct 90 in-depth interviews in with more than 60 global/multinational, mid-size and large corporations as well as federal and local government agencies across the world. In 2010, Visa commissioned Deloitte Consulting to update each of the following 28 Travel and Corporate Card Best Practices from the comprehensive study to include current trends, updated case studies, and additional key findings. See the section entitled Study Methodology for additional detail. The Visa Global Procure-to-Pay and Commercial Card Best Practices Study describes how these organizations implement and optimize their Procure-to-Pay processes and commercial card programs. The study gives you access to best practices for a variety of topics: Maximizing the benefits of purchasing and corporate card programs. Streamlining travel and entertainment management. Taking advantage of the latest innovative best practices. And automating the entire Procure-to-Pay process. Each best practice is divided into three useful sections a recommendation overview, a benefits outline and steps for implementation so you can quickly find the information you need. For more information on the Visa Global Procure-to-Pay and Commercial Card Best Practices Study, contact your commercial banker. Table of Contents Create a Procure-to-Pay Shared Services Organization Study Methodology Note: Survey results, research and practice recommendations are intended for informational purposes only and should not be relied upon for marketing, legal, technical, tax, financial or other advice. When implementing any new strategy or practice, you should consult with your legal counsel to determine what laws and regulations may apply to your specific circumstances. Visa is not responsible for your use of the information, including errors of any kind, or any assumptions or conclusions you might draw from its use. Much of the information contained in this document applies internationally, but a certain amount of information applies only to certain countries or regions. Although Visa tries to mark all country- and region-specific information with a country indication, it does not warrant or represent that all information without indication applies internationally. You should check the applicability of any information in this document to you or your organization.

3 Create a Procure-to-Pay Shared Services Organization Leading organizations encourage a collaborative relationship between their Procurement, Accounts Payable, and business functions to maximize the efficiency of the entire Procure-to-Pay process. Leading companies typically drive the integration of Procurement and Accounts Payable through the development of shared services organizations. They encourage a close working relationship with the business units they support through a variety of approaches including cross functional business management teams, internal stakeholder councils, and business unit liaisons. Shared Services In most leading organizations, a tighter integration of Procurement and Accounts Payable has been achieved through the adoption of a shared services model with center-led management of the Procure-to-Pay process. This approach allows organizations to standardize and streamline non-strategic activities, increasing the quality of service provided to the company. Additionally, this enables Procurement and Accounts Payables' joint participation on cross functional teams for initiatives such as a purchasing card implementation, an e-procurement upgrade, or strategic sourcing. One multinational communications company integrated its Procurement and Accounts Payable functions through the establishment of a shared services organization. The shared services organization positioned the Procurement and Accounts Payable functions as an integrated organization with aligned goals and objectives, helping drive operational and process standardization initiatives. Leaders of both functions met on a scheduled monthly basis to monitor progress and address issues such as the use of preferred suppliers, contract and payment terms, and technology integration efforts. "Accounts Payable and Procurement representatives meet regularly with business unit leads. They give us feedback on our Procure-to-Pay performance and advice on areas for improvement." Account Payable Manager, Global Communications Company A large U.S. utilities company found that the establishment of a shared services organization improved its employee development. The organization found that by allowing employees within the shared services organization to temporarily switch roles amongst the various functions, employees developed a better understanding of organizational Procure-to-Pay processes. Providing these development opportunities led to increased employee productivity as well as increased employee satisfaction. A multinational media and telecommunications company found that incorporation of Procurement and Accounts Payable into a shared services organization allowed it to streamline employee roles and responsibilities. Employee responsibilities were reduced to a set of core tasks, allowing employees to focus on a narrower range of activities dramatically increasing productivity. After one year, individual transaction processing productivity within the Procurement function increased by 70 percent. Cross Functional Business Management Best practice companies also ensure that Procurement and Accounts Payable are positioned to strategically assist both core and non-core business functions. A major U.S. telecommunications company positioned its Procurement and Accounts Payable 1

4 functions within its shared services organization to work with the Human Resources, Marketing, and Finance departments on their supply chains processes. Procurement and Accounts Payable worked with these functions to develop technology, tools, and templates to streamline their supplier contracting, negotiation, and payment processes. In addition, metrics were created such as the length of time from RFP issuance to supplier negotiations to contract finalization. These metrics were used to track and improve upon the performance of their functions. Internal Councils Some companies have developed internal councils composed of key representatives of Procurement and Accounts Payable and major internal Procure-to-Pay stakeholders and end-users. These councils meet on a regular basis to discuss Procure-to-Pay initiatives and to provide feedback on the Procure-to-Pay process. One multinational technology company with an internal shared services organization developed a "Procure-to-Pay" council that met on a quarterly basis. Members of the council included the heaviest users of Procure-to-Pay services in addition to key Procure-to-Pay representatives. The council meetings enabled the Procure-to-Pay function to better understand the needs of its customers in order to ensure continual improvement of its services. Multinational organizations ensure that Procurement and Accounts Payable liaisons include representatives from key operating countries or regions. Business Liaisons An alternative to Procure-to-Pay councils used by some organizations is the assignment of Procurement and Accounts Payable liaisons to work with individual business units to help set goals, provide training, and evaluate new opportunities. A global manufacturing company created a team of key Procure-to-Pay representatives that met with each individual business unit on a quarterly basis. During these meetings, the Procure-to-Pay liaisons discussed the business units' Procure-to-Pay needs, which enabled the development of customized holistic Procure-to-Pay solutions for each business unit. These solutions typically involved the selection and implementation of appropriate technologies in addition to improved supplier management and consolidation. Options for Best Practice Adoption Best practice companies typically adopt a combination of the following options to strategically align the Procurement and Accounts Payable functions within a shared services organization with the needs of the company. 2

5 Options for Adoption Option I Include shared services representatives from Procurement and Accounts Payable on cross-functional teams and initiatives Option II Assign shared services representatives from Procurement and Accounts Payable to meet with business unit representatives on a regular basis Benefits Improves efficiency and organizational adoption of technology implementations and Procure-to-Pay initiatives Increases Procure-to-Pay process efficiencies and service quality Improves ability to support strategic business needs Key Considerations Must determine cross-functional teams and initiatives requiring Procurement and Accounts Payable representation Must determine type of interaction (e.g., council or business liaison) May require significant time from resources in Procurement and Accounts Payable Benefits The study results demonstrate that strategically positioned Procurement and Accounts Payable functions within a shared service organization offer a number of benefits. Category Cost Savings and Process Efficiency Benefit Obtained Strategic positioning of Procurement and Accounts Payable results in cost savings and increased process efficiencies through the streamlining and standardization of Procure-to-Pay activities. Supplier Management Increased collaboration between Procurement, Accounts Payable, and business units encourages the development of initiatives that improve supplier sourcing, negotiations, and contract management. User Satisfaction Increased Procurement and Accounts Payable alignment with organizational needs increases user satisfaction. Implementation Steps There are a series of actions steps necessary to strategically position Procurement and Accounts Payable within a shared services organization. 3

6 # Description of Action Step 1 Gain senior management support for the evaluation and implementation of a shared services organization 2 Establish a cross-functional team to evaluate the implementation of a shared services organization 3 Assess the current organization structure, process, supporting technology 4 Determine the shared services organization options, including the role of the Accounts Payable and Procurement functions 5 Develop a business case to support organization structure recommendation 6 Implement the organization structure; ensure business unit liaisons exist for each of the functions 7 Align success of Procurement and Accounts Payable functions with the overall business goals 8 Conduct internal surveys with business units to measure their level of satisfaction and effectiveness 4

Study Methodology The objective of the Visa Procure-to-Pay and Commercial Card Best Practices Study was to better understand the changes in the segment and to gain a comprehensive understanding of

7 Study Methodology The objective of the Visa Procure-to-Pay and Commercial Card Best Practices Study was to better understand the changes in the segment and to gain a comprehensive understanding of best practices across the Procure-to-Pay process and within the commercial card program. Visa commissioned Deloitte Consulting to conduct 90 in-depth interviews in the summer of 2007 with more than 60 global/multinational, mid-size and large corporations as well as federal and local government agencies across the world. In 2010, Visa commissioned Deloitte Consulting to update each of the following 28 Travel and Corporate Card Best Practices from the comprehensive study to include current trends, updated case studies, and additional key findings. The evaluation of the Procure-to-Pay process included sourcing, order placement, payment and settlement, reconciliation, control and audit, and reporting activities. For the commercial card management process, the assessment focused on practices related to the purchasing and corporate card program strategy, management, and reporting. Interviewees included Regional Controllers, Chief Procurement Officers, Directors of Strategic Sourcing, Procurement Managers, Accounts Payable Managers, Global/Regional/Local Commercial Card Program Managers and Travel Managers. Study participants had a range of commercial card programs in place including purchasing card, corporate card and commercial one card programs with each of the top three card providers: Visa, MasterCard and/or American Express. 5 STUDY METHODOLOGY

Introduction. Table of Contents

Introduction. Table of Contents Introduction To stay competitive, you know how important it is to find new ways to streamline and save on your company s operations. Learning how leading companies handle commercial payments can give you