Tuesday, December 11, 2012

Invoice Automation Today and Tomorrow

Mel StealsDirector of Invoice Automation SolutionsPNC A/P Advantage

Agenda

Payment Automation Context

Invoice Automation 101

Future State Thinking

Summary

Q&A

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What is Payables Automation?

A Holistic Procurement-to-Payment Solution includes: – Eliminating paper from payable processing– Enabling efficiency and continuous improvement– Bringing visibility to outstanding work and liability– Accelerating approval and optimizing working capital– Enhancing financial control and regulatory compliance– Improving interaction and relationships with vendors

Centralized Document Receipt Foundation for Invoice Paper Elimination

E-Invoicing (e.g. EDI) integration including a Vendor Portal (free to suppliers) for status updates and invoice submission

Invoice

Match &Exceptions

Purchase

Order

PurchaseRequest

InvoiceWorkflow

Analysis &

Alerts

DeliveryReceipt

Discounts& Payment

ImagingIndex & Archive

OCRKeying &GL coding

InvoiceReceipt

3

Anecdotal Evidence: Paper in Payment Processes

4

Empirical Evidence: Paper in Payables Processes

5

Source: Paystream Advisors AP Department Benchmarks and Analysis 2011

Source: Credit Today Benchmarking Survey: Electronic Billing and Payment Trends, Part II

Invoicing Payments

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Electronic Payment is Setting the Pace of Change

Vendor Management Automation Constrains Change

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Common Challenges Processing Payment

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Procure PayPaper

HandlingMissingInvoices

Errors

Lack of Visibility

Vendor Management Limitations

TechnologyConstraints

No Dominant Public B to B Network

Transforming Procurement to Payment Trends

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Procure PayOCR / IDR

MaturityCloud

ComputingAdapter

TechnologyFlexible

ArchitectureElectronic Networks

Strategic Value

Low High

Low

High

Spend Size

Supply Chain Finance

P-Card

Discount Realization Enhancement Strategies

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End Game: Make the “effective” cost per invoice zero

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$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

Accounts Payable and Approval Costs

“Before Automation”

Central Receipt, Front End Imaging

and OCR savings

E- Invoice, Matching, Workflow and

Reporting savings

Dynamic Discount, Supply Chain Finance

or Unrealized P-card

Assumptions:

• 10,000 Invoices Per Month• $20 million Spend Base for Incremental Discounts• 1.2% Discount Rate

≈ 22% APR

Invoice Automation 101

Multi Tenant Architecture a Must for Complex Organizations Using Cloud Computing Solutions

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Roles and usersWarrantRegisters

Environment defaultStorageLanguage

OperationLicensing Master

Client XEnvironment

Company Company

Client YEnvironment

Company

Each customer is housed in a distinct Environment

Each Environment has data in its distinct SQL Server database

The database contains pointers to images in the file system

Each environment contains its own set of web pages

The Master database contains higher level configuration information like transfer schedules

A/P Automation Building Blocks

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ERP

AP ExceptionHandling

Management Dashboard

AndReporting

Mail Email, Fax Electronc Transfer/EDI

Invoice data capture

NON- PO workflows

PO Workflows

Centralized Receipt via “Reverse” Lockbox

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Invoice Data Capture (assisted by OCR)

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The Inclusion of (Human Readable) E-Invoices

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The Paperless Invoice Hub (Invoice Log)

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Accessing Invoices via the Cloud

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Data Capture

Workflow

GL Coding

Presentation

Using the Vendor Portal to Improve Interaction

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Implementation: Accounts Payable SME Facilitated

Implementation ConsultationPNC will assign a payables automation consultant to coordinate your experience, gather requirements, provide invoice processing advice and advocate for you.

Planning and Documentation

PNC will ask you for samples of current invoices, sample inbound/outbound files, record layouts, approver hierarchies, legal code definition. PNC will also gather business rules, special handling processes and reporting needs. Bi-directional file mapping will begin.

System Setup and Configuration

After reviewed by PNC’s technical team, a requirements document will be submitted for your approval. In addition, a Project Plan and a Test Plan will be finalized. PNC configures your rules and hierarchies. Your feedback on content, appearance and workflow is sought.

Testing and User Acceptance

PNC works with you to identify scenarios to test prior to going live.

Training and Change Management

PNC uses a train the trainer approach and can provide insights from other implementations.

Go Live: Application placed in Production After the roll out is complete, a transition is made to a post implementation support model. Implementation typically takes between 75 to 120 days from sign off of requirements.

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Implementation: Initial Configuration for Roles, Workflow, and GL Coding are Uploaded into Tool

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Implementation: The Primary Implementation Dependency on IT is in Transmission Establishment

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Future State of Payment Automation

Statusand

ValidationTables

ApprovedInvoices

Suppliers Invoice Receipt Outsourcing

Buyer System of Record

Invoice Data

Supplier with < 100 invoices / month

E-Mail or Fax(Lockbox Operations)

Invoice Data

Supplier sending paper by mail

Post Office(Lockbox Operations)

Invoice Data File Integration(E-commerce Ops)

Supplier with > 100 invoices / month

Supplier using Web - entry

Invoice Data Web Entered Data(Supplier Portal)

The Future of Payment Automation

BankPortals

PaymentPlatform

BuyerERP

ClientSystem

of Record

Supplier Portals

Self Service Administration

PO Delivery

PO Flip

Invoice Validation

Approval and Pay Status

Reporting and Data Export

Available Discounts

FinancingOptions

Vendor Master Integration

Buyer Portals

Exception Archive

Invoice Log

PO / Contract Matching

Approval Routing

Dashboards, Reporting and Data Exports

Requisition / PO Creation

Catalogues*

Discount Options*

Emerging Cloud Based Invoice Interface Products

* Third party dependencies

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Mobile Approval and Invoice Receipt

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APAMobile

Invoice Approval from a Smart Phone:

Aimed for the people “On the run”

What one can do:1) Log into APA via web

browser2) Pick one (or more)

invoice(s)3) Review key details

Invoice basic information

Posting Invoice image Workflow

4) Sign or send as Unknown

Not an app! Works with “any” smart phone that can access the web via a browser

Mobile Invoice Input / Receipt:

Take a picture Email it to your

local Expense emailadress For example: Expense@yourcompany.com

Summary

AP Automation:Back office payables automation combined….

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ERP

Status&

ValidationTables

ApprovedInvoices

Suppliers

Archiving, Matching, Workflow

and Reporting Platform

Invoice Data

Supplier sending paper

Paper invoices(Boston Lockbox)

Invoice Data

Supplier with < 100 invoices / month

E-Mail and Fax(Boston Lockbox)

*All suppliers have ability to track invoices through the Supplier Portal

Invoice Data

Supplier on other networks

Through B to B networks

Receiving OperationsSystem of RecordA/P Automation Technology

Invoice Data Direct supplier integration

Supplier with > 100 invoices / month

Optical Character

Recognition (OCR)

Platform

Supplier using Web - entry

Invoice Data Web entered invoice data Supplier

Portal

SupplierPortal

FileMappingPlatform

Payment Optimization:….with front end payment optimization.

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ERPConsolidatedPayment File• Card• Check

Print/Mail • CDA/ARP• Wire• ACH

Payables Advantage platformseparates checkfrom card payments

Checks printedand mailed tosuppliers

Cards loaded andE-mail notificationsTo suppliers

Export File / Reports

E-mail Control Totals

Information Reporting

Check RegisterBalance ReportingSpecial Reports

ACH Platform

Sent to Fed or SWIFTfor settlement

Feeds ARP, Positive Pay and Payee

Positive PayCheck Image Funds Transfer

Card Platform

Sent to EPN clearinghouse

Print Platform

ARP Platform

Wire Platform

Status&

ValidationTables

ApprovedInvoices

The benefits of invoice automation parallel the benefits of payment optimization

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Centralizing Invoice Document Receipt

Easing Electronic Invoice Enablement

Automating A/P Workflow Process

Providing Visibility and Intelligence

Optimizing Working Capital Usage

Procure

PAYMENT OPTIMIZATION

Outsourcing Check Printing

Consolidating File Types and Formats

Standardizing Payment Process

Accessing Information via the Web

Maximizing Card Revenue Share

A

P

A

U

T

O

M

A

T

I

O

N

All Organizations Face Pressure to Drive Down Invoice Processing Costs to Best-in-Class Levels

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Paper Peer I&W I&W + OCR

E-invoice Best in Class

3rd Party Cost

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

Cost Per Invoice

Source: The Hackett Group

Material differences in the economics of the various payment alternatives create the opportunity to pursue an optimum payment mix and a winning proposition.

Payment Optimization – Working Capital Value Add

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Q&A

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