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Maximizing Supplier Adoption Methods for Achieving Perfection in AP When Suppliers are Sluggish
Jimmy LeFeverDirector, Research and ConsultingPayStream Advisors
Today’s Presenter
Jimmy LeFeverDirector, Research and Consulting
PayStream [email protected]
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 Servicesfor Financial Strategists
• Purchase-to-Pay Research, Tools and Education• NavigatorTM Solution Ratings and Reviews• PerfectMatchAPTM Solution Diagnostic• Process Reviews, Assessments and RFP’s
www.paystreamadvisors.com
Agenda• Latest Research on Invoice Management• 4 eInvoicing Rollout Mistakes to Avoid• Supplier Recruitment Best Practices• Carrots vs. Sticks: Supplier Engagement
Strategies• Questions?
Latest Research onInvoice Management
Invoice Management ResearchPaper 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 secondinvoice.
Invoice Management ResearchMost organizations receive the majority of invoices in paper format.
Paper
Fax
EDI/XML
Web Upload/Supplier Portal
50%
30%
4%
8%8%
PayStream Advisors’ 2016 Data Capture Report| Q1 2016 | All rights reserved.
“How much of eachinvoice format does your organization receive?”
Invoice Management ResearchMost organizations manually enter invoice data.
Invoice details are manually
entered by our staff 73%
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.
17%
10%
PayStream Advisors’ 2016 Data Capture Report| Q1 2016 | All rights reserved.
“How is invoice informationentered into your ERP, accounting or APsoftware?”
Invoice Management ResearchThere is a troubling inability to capture early payment discounts.
Sometimes
Always
Never
How often most organizations are able to capture early payment discounts
65%
19% 16%
PayStream Advisors’ 2016 AP & Working Capital Report | Q2 2016| All rights reserved.
“How often is yourorganization able tocapture available early payment discounts?”
Invoice Management ResearchPaper related challenges are the main culprits behind missed discounts.
Missing informationon invoices
57%Manual routing of invoices
62%
55%
Large number ofexceptions
46%
Lengthy approval cycles
43%
Lost invoices
38%Decentralized invoicereceipt
PayStream Advisors’ 2016 AP & Working Capital Report | Q2 2016| All rights reserved.
“What are the top threeproblems that lead to late payments and missed discounts at your organization?”
“Early payment discounts can provide working capital to fund expansion, product development and other growth strategies.”
Invoice Management ResearchMost organizations store hard copies of invoices.
Invoices are manuallyfiled in hard copy 40%
Invoices are scanned at acentral location by our staff
Invoices are scanned by athird-party solution provider
Invoices are scanned at multiple facilities of our own
30%
18%
12%
PayStream Advisors’ 2016 Data Capture Report| Q1 2016 | All rights reserved.
“How does yourorganization retain invoice documents?”
Invoice Management ResearchMost organizations strive for reduction of processing costs, error, and time
54%Reduction in labor /processing costs
31%Fewer lost or missinginvoices
30%Quicker approval cycles
25%Better visibility across thetransaction lifecycle
24%Increased ability to capturediscounts
23%Increased on-timepayments
17%Reduction in exceptions/discrepancies
10%Fewer duplicate invoices
9%Improved vendorsatisfaction
5%Fewer supplier inquiries
PayStream Advisors’ Invoice Receipt Management Report 2015 | Q3 2015 | All rights reserved.
“What factors are driving your organization to consider an electronic invoicing solution?” (top 5 answers shown)
Invoice Management ResearchMany companies centralize invoice receipt and payment before moving to eInvoicing.
“Describe your AP operation.”
4 eInvoicing RolloutMistakes 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 CostsCost-per-Invoice Calculator
To calculate your CPI, visit www.paystreamadvisors.com/cost-per-invoice-calculator/
Failure to EngageSuppliers
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 GrowthBenchmarking Items for AP Process Improvement
Metric Novices
Average processing time from invoice receipt to approval
45 days
Average processing cost per invoice (combination of paper and electronic)
$15.00
Percentage of invoice terms discounts captured
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 areMany suppliers will
not join a fee-based network.
Offer long-term 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
• 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
Communicate the benefits to suppliers.
Recruitment Best Practices
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
Supplier Segmentation
Carrots vs. Sticks: Supplier Engagement Strategies
Proactive Supplier Motivation
Send out a mass participation push to all suppliers.
Sticks vs. Carrots
Segment and tier enrollment efforts based on size, type and category.
Proactive Supplier Motivation
Offer a simple ‘yes’ or ‘no’ option for suppliers to enroll.
Sticks vs. Carrots
Offer suppliers a range of enrollment options.
Proactive Supplier Motivation
Treat supplier reluctance as a necessary evil in eInvoicing program adoption.
Sticks vs. Carrots
Effectively communicate to suppliers the benefits for their receivables with each offer.
Proactive Supplier Motivation
Neglect to incentivize suppliers with bottom line value proposition.
Sticks vs. Carrots
Offer tiered payment timelines, payments for methods that benefit your organization and longer payments for manual methods.
Proactive Supplier Motivation
Fail to consider supplier cost and time spent on registration.
Sticks vs. Carrots
Choose a cheap (or free), intuitive, easy-to-use interface that streamlines the registration process.
for spending your time with us.
Thank You