Maximizing Supplier Adoption Methods for Achieving Perfection in AP When Suppliers are Sluggish Jimmy LeFever Director, Research and Consulting PayStream Advisors
Today s Presenter Jimmy LeFever Director, Research and Consulting PayStream Advisors Jimmy@PayStreamAdvisors.com Jimmy LeFever oversees PayStream s research and analysis of source to settle, Order-to-Cash, and Travel and Expense Management solutions. He actively leads PayStream consulting engagements for Finance and Procurement departments, helping them identify the most appropriate solutions, conduct supplier/vendor analysis, facilitate RFPs to solution providers, and execute change management. He also consults with solution providers on product management, sales, and marketing.
Research & Advisory Services for Financial Strategists Purchase-to-Pay Research, Tools and Education Navigator TM Solution Ratings and Reviews PerfectMatchAP TM Solution Diagnostic Process Reviews, Assessments and RFP s
Agenda Latest Research on Invoice Management 4 einvoicing Rollout Mistakes to Avoid Supplier Recruitment Best Practices Carrots vs. Sticks: Supplier Engagement Strategies Questions? www.paystreamadvisors.com
Latest Research on Invoice Management
Invoice Management Research Paper invoices are the enemy of efficiency in Accounts Payable Management does not have visibility into all of the company s outstanding liabilities when making investment and borrowing decisions. Invoices are beyond the discount period by the time they are entered into the accounting system and are ready for processing. Suppliers can put your company on credit hold because invoices are late and not paid on time. Invoices not paid on time increases the potential for duplicate invoices if the supplier sends a second invoice.
Invoice Management Research Most organizations receive the majority of invoices in paper format. How much of each invoice format does your organization receive? 4% 8% 8% Paper Email Fax EDI/XML 50% Web Upload/ Supplier Portal 30% PayStream Advisors 2016 Data Capture Report Q1 2016 All rights reserved.
Invoice Management Research Most organizations manually enter invoice data. How is invoice information entered into your ERP, accounting or AP software? Invoice details are manually entered by our staff Invoice details are captured by software (a.k.a character recognition, OCR), then our staff checks for accuracy Invoice details are entered by a third-party provider. We only handle routing and approval of invoices. 10% 17% 73% PayStream Advisors 2016 Data Capture Report Q1 2016 All rights reserved.
Invoice Management Research There is a troubling inability to capture early payment discounts. How often is your organization able to capture available early payment discounts? 19% 16% Always Sometimes Never 65% PayStream Advisors 2016 AP & Working Capital Report Q2 2016 All rights reserved.
Invoice Management Research Paper related challenges are the main culprits behind missed discounts. What are the top three problems that lead to late payments and missed discounts at your organization? Lengthy approval cycles Manual routing of invoices Missing information on invoices 57% 55% 62% Early payment discounts can provide working capital to fund expansion, product development and other growth strategies. Lost invoices Large number of exceptions Decentralized invoice receipt 38% 43% 46% PayStream Advisors 2016 AP & Working Capital Report Q2 2016 All rights reserved.
Invoice Management Research Most organizations store hard copies of invoices. How does your organization retain invoice documents? Invoices are manually filed in hard copy 40% Invoices are scanned at a central location by our staff 30% Invoices are scanned by a third-party solution provider 18% Invoices are scanned at multiple facilities of our own 12% PayStream Advisors 2016 Data Capture Report Q1 2016 All rights reserved.
Invoice Management Research Most organizations strive for reduction of processing costs, error, and time What factors are driving your organization to consider an electronic invoicing solution? (top 5 answers shown) Reduction in labor / processing costs Fewer lost or missing invoices Quicker approval cycles 31% 30% 54% Better visibility across the transaction lifecycle 25% Increased ability to capture discounts 24% Increased on-time 23% PayStream Advisors Invoice Receipt Management Report 2015 Q3 2015 All rights reserved.
Invoice Management Research Many companies centralize invoice receipt and payment before moving to einvoicing. Describe your AP operation.
4 einvoicing Rollout Mistakes to Avoid
Automation of Flawed Processes Innovators focus on process improvement, rather than automation.
Failure to Develop Success Measures What gets measured gets improved.
What to Measure? Use these 4-steps 1. Measure your current process; Establish a baseline 2. What s broken? Identify specific goals for improvement (SMART Goals) 3. Secure the resources needed to achieve outlined goals 4. Measure, and if necessary, make adjustments to ensure achievements of your goals
Measuring True Costs Cost-per-Invoice Calculator To calculate your CPI, visit www.paystreamadvisors.com/cost-per-invoice-calculator/
Failure to Engage Suppliers Innovators target all suppliers, not just the ones that make the most noise.
No Plan for Scalable Growth Innovators take a long-term, holistic approach and design a business case accordingly.
Planning for Scalable Growth Benchmarking Items for AP Process Improvement Metric Average processing time from invoice receipt to approval Average processing cost per invoice (combination of paper and electronic) Percentage of invoice terms discounts captured Novices 45 days $15.00 18% Mainstream Innovators 23 days 5 days $6.70 $2.36 40% 75%
Supplier Recruitment Best Practices
Recruitment Best Practices Onboard aggressively. Many solution providers have dedicated onboarding teams. Onboard strategically Expand focus beyond just top suppliers. Meet suppliers where they are Many suppliers will not join a fee-based network. Offer longterm value Identify value-add features and make suppliers aware.
Recruitment Best Practices Get paid faster with invoices going straight to processing Cut costs and increased efficiency Communicate the benefits to suppliers. Track the status of every invoice for improved cash flow and working capital management Trade anywhere in the world with the correct sales tax automatically applied Easily add digital signatures to comply with policies and regulations Quickly resolve disputes and queries with collaboration features Boost your green credentials by eliminating paper immediately
Recruitment Best Practices Supplier Segmentation Start with supplier segmentation analysis and identify those vendors to target first for onboarding. Solution providers add value to the equation by leveraging proven best practices to develop various activation campaigns email, phone and direct mail for different supplier groups The solution offers functionality to allow suppliers to enroll themselves by logging into the application to provide bank account, tax, and legal information Buyers can manually enter supplier information or import information from their ERP or AP systems
Carrots vs. Sticks: Supplier Engagement Strategies
Proactive Supplier Motivation Sticks vs. Carrots Send out a mass participation push to all suppliers. Segment and tier enrollment efforts based on size, type and category.
Proactive Supplier Motivation Sticks vs. Carrots Offer a simple yes or no option for suppliers to enroll. Offer suppliers a range of enrollment options.
Proactive Supplier Motivation Sticks vs. Carrots Treat supplier reluctance as a necessary evil in einvoicing program adoption. Effectively communicate to suppliers the benefits for their receivables with each offer.
Proactive Supplier Motivation Sticks vs. Carrots Neglect to incentivize suppliers with bottom line value proposition. Offer tiered payment timelines, payments for methods that benefit your organization and longer payments for manual methods.
Proactive Supplier Motivation Sticks vs. Carrots Fail to consider supplier cost and time spent on registration. Choose a cheap (or free), intuitive, easyto-use interface that streamlines the registration process.
Questions? Jimmy@PayStreamAdvisors.com www.paystreamadvisors.com
Thank You for spending your time with us.