7 golden rules for accounts payable automation

8/13/2019 7 Golden Rules for Accounts Payable Automation

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7 Golden Rules for

Accounts PayableAutomationMinimizing problems,ensuring success

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http://www.basware.com/




“Invoices that are sent to the APdepartment for approval that havemissing or inaccurate informationcan take days or even weeks toresolve before the invoice can beprocessed and paid.”PayStream Advisors, Technology Insight Series, AutomatingAP Processes through imaging and workow, Q3, 2010



Basware ebook7 Golden Rules for Accounts Payable Automation

Contents

Proven rules for easier implementation 3Rule #1: Agree on the scope 5Rule #2: Analyze existing processes 6Rule #3: Sweat the details 7Rule #4: Standardization is more importantthan centralization 9Rule #5: Know your priorities 10Rule #6: Map your priorities 11Rule #7: Be realistic 12Conclusion: Build the right foundations 13




Before starting an accounts payable automation process,it’s vital to get a clear picture of what success looks like.Without knowing where you want to get to, it will be virtuallyimpossible to make decisions on how to get there. In doingso, it is important to dene the core areas and processes youwant automation to cover.

Of course, every company is different. But we wouldrecommend, as a baseline, you examine:

• Invoice arrival (including scan and capture, e-Invoicingand supplier portals)

• Accounts payable invoice handling (facilitating tools)• Invoice review and approval• Opportunities for automatic matching

(including exception scenarios)• Payment options• Archiving• And stakeholder engagement

(both employees and suppliers)

This will give you a better idea of the scope of yourautomation project. It will also allow you to resist scope-creep—the tendency for projects to expand over timeto meet everyone’s latest opinion of what’s required(rather than the core strategic demands). Ultimately,

it will give you a better foundation for everything that follows.

Rule 1Agree on the scope

Making the right plansOne of the world’s largest global home furnishing companiesspent two years mapping out their processes in detail priorto automating them.

It meant that when it came to developing a plan of action,they clearly understood what they already had and whatthey wanted to achieve. The result was that when Baswarewas selected to automate their invoice handling process,the implementation was not only smooth but deliveredexactly what they wanted.

It just goes to show: it pays to be organized.




Maybe you’re moving from a paper-based process to anelectronic one. Or possibly you are highly automated already.Unless you are condent your existing process includesthe highest possible levels of automation, it’s essential youconduct a full analysis of the following areas.

Controls and visibilityWithout doubt, control is a major motivation for anyautomation project. Lack of process visibility is often citedas one of the biggest pain points for any company embarkingon an invoice automation project.

Current invoice handling process and paymentsHow does your process work today? Where do invoices comefrom? Who opens the envelopes? By asking the really basicquestions, you will be better positioned to make the rightchoices as you begin your invoice automation project.

Stakeholder engagementInvoice automation has plenty of stakeholders not just theaccounts payable department. There are the people buyingand ordering goods (and probably reviewing and approvingthe invoices). There are the controllers and auditors, the CFOand other budget holders. And lastly there are the suppliers.Make sure to assess each group’s role in your existing process.

Rule 2Analyze existing processes

Getting the full picture at UniCredit GroupUniCredit Group—Europe’s second largest bank—conducteda full process audit to ensure its nancial processes wouldcontinue to comply with nancial sector regulations.This uncovered that invoices were being sent directlyto project managers rather than to accounts payable.The result was huge delays in payment.

Inevitably, suppliers would call the nance departmentto track an invoice and accounts payable would know nothingabout it. For their part, depart-ments were keeping their owninvoicing records, unique to their specic transactions.

The result was a mountain of paper spread across differentlocations. This led to inconsistent, decentralized recordkeeping, misled or lost invoices, and delayed invoiceprocessing. All of which compromised UniCredit’s highlevel of customer service.

Read the full story atwww.basware.com/resources/customer-success-unicredit-group

http://www.basware.com/resources/customer-success-unicredit-group

http://www.basware.com/resources/customer-success-unicredit-group




Invoice arrival and data captureAll things being equal, the best practice is to do everythingpossible to ensure you receive invoices electronically. TrueXML e-invoices directly from your suppliers are ideal. Beyondthat, outsourcing scan and capture of paper invoices (to aservice) is going to give you the best results at the lowest cost.

Invoice pre-processingPre-processing data validation can push a lot of workaway from your accounts payable department back to yoursuppliers. The point is to ensure your suppliers send youquality invoices and to return them (automatically) whenthey don’t.

Rule 3Sweat the details

Prescribing success for LloydspharmacyLloydspharmacy processes around 129,000 invoicesper employee. This high level of invoice throughput wasachieved through investing in a dedicated campaign toaccelerate supplier activation, offering a combination of truee-Invoicing, a supplier portal and Basware’s Scan & CaptureService. The total volume of paper continues to reduce andLloydspharmacy is on-track to reach their goal of 100%e-Invoicing within a three year period.

Read the full story atwww.basware.com/resources/customer-success-lloydspharmacy

“We needed to improve the efciency of our AP function to cope with an anticipated growth in invoice volumes without an accompanying increase in resources.”

Mark Fura,Financial Systems Controller at Lloydspharmacy

http://www.basware.com/resources/customer-success-lloydspharmacy







Invoice pre-processingAutomate as much as possible within the limits of control.Aim for high rates of straight-through-processing butunderstand that any automation that minimizes time spenton exceptions is saving you money.

Invoice post-processingAssuming you can get the invoices processed fast enough,various options for supply chain nancing become available.

Auditing and reportingHaving actionable intelligence is essential to any processimprovement initiatives, as well as mandatory for in-house,external, period end, etc. reporting.

Rule 3 (continued)Sweat the details

“The key success factor for this project was how easily wecould integrate invoice processing with our complex ERPenvironment. The Basware solution has proved incrediblyexible, providing a seamless integration with our existingsystems.”

Ed Prins,Financial Services Manager at Heineken

Unlocking success for HeinekenConsolidating the nance functions into a single sharedservice center (SSC) together with Basware’s invoiceautomation solution helped deliver signicant time and costsavings for Heineken. Today, up to 97% of purchase invoicesare matched automatically.

Read the full story atwww.basware.com/resources/customer-success-heineken

http://www.basware.com/resources/customer-success-heineken







To centralize or not to centralize?In the nal analysis, it is probably still better to centralize youraccounts payable.

If you have a very large accounts payable organization,the economy of scale provided will likely result in additionalefciencies (and management is typically easier wheneveryone is in the same room). That said, getting the mixof languages required to service your global invoicing inone location is difcult. Plus, due to the focused natureof SSC work, employee turnover is typically much higher.You may also have issues with your ERP landscape thataffects your decision to centralize.

Technology now lets a decentralized organization functionmuch more efciently than at any time in the past. Videoconferencing is virtually free. And both scanning and invoiceprocessing software is fully available as service/cloud-basedsolutions.

However, rather than centralize inefcient functions,organizations are now considering what’s strategic and whatisn’t. This is more about standardization than centralization.And as more and more organizations determine what canbe outsourced, vendors are offering solutions catering to thisspecic requirement.

Rule 4Standardization is more importantthan centralization

Global standardization for ABBA global organization comprising 28 country units within 3geographic regions, ABB has a complex structure. It meantthat they needed to focus on an invoice processing solutionthat could consolidate data from multiple ERPs around theworld, handle discrete organizational units, as well as handledifferent currencies, tax laws and languages—all while havinga long-term focus on standardizing their process.

Read the full story atwww.basware.com/resources/customer-success-abb

"Our focus is to further standardize AP operations andachieve even higher levels of automation. We are continuouslyworking with Basware to implement invoice automation bestpractices so we can maximize processing efciencies and gainthe strongest business benets.”

Pether Jonsson Group Vice President ABB Headquarters, Switzerland

http://www.basware.com/resources/customer-success-abb







Control, visibility, efciency and agilityThese four core priorities underlie virtually every invoiceautomation project we have seen. These are the top-downgoals of the CFO and the broad elements which plague SSCmanagers, AP clerks and cost center owners alike.

Which activities are non-core? Which could be managedbetter and cheaper by a third-party? Scan and capture,application hosting, supply chain nancing, etc. There aremany options to consider.

You can even outsource the entire accounts payable functionto a variety of vendors. Some of these elements are just tooeasily commoditized for you to do them cost effectively whileothers are too specialized (eg supply chain nancing).

Improve efciency by cutting paperGet off paper as soon as you possibly can. You don’t want it,you don’t need it. It slows you down and costs you money ateach and every step along your process. Countries around theworld are mandating e-Invoicing and the technology is provenbeyond a doubt to save you money, time and energy.

E-Invoicing is the future but there are still tens of thousandsof vendors sending paper invoices. Best practice tacticsinclude a combination of e-Invoicing, a scan and capture

service, supplier portal and supplier activation services—thegoal: 100% paperless

Rule 5Know your priorities

Increase agility regardless of ERPMost businesses want to be more agile. But many think theymust wait until their ERP landscape is harmonized beforereaping the benets of invoice automation. This simply isn’ttrue. A really good invoice processing solution will provideconsolidation across disparate systems.

Agility also makes early payment discounts and other supplychain nance initiatives possible. At some point, AP movesfrom being a cost center to a prot center.

Mandating e-Invoicing in EuropeThe EU Commission expects to see e-Invoicing becomethe predominant method of invoicing by 2020 with manycountries mandating e-Invoicing sooner. Also, the USDepartment of the Treasury announced it is mandatingthat all Treasury Bureaus implement the internet paymentplatform (IPP), an electronic invoice processing solution,by the end of year 2012.

Download a report: 2011 E-Invoicing Study: Survey of AP, AR and P2P Professionals www.basware.com/resources/2011-e-invoicing-study-survey-of-ap- ar-and-p2p-professionals


http://www.basware.com/resources/2011-e-invoicing-study-survey-of-ap-ar-and-p2p-professionals








To get the right solution for your business, you will needto articulate your priorities and map them into an RFP.One option is to ask vendors if they have an RFP template.This will ensure your specication reects the solution theysell as well as their ability to deliver. (It could also make youconsider a few things you may have ignored but beware, yourinterests and a vendor’s are not guaranteed to be aligned.)

Although you will have done your homework, the dangeris that you simply end up specifying an electronicrepresentation of the same inefcient process. Vendorscan ensure you avoid this by helping you understand bestpractices. And, of course, you can also speak to analystsand outside consultants to get a more rounded view.

Rule 6Map your priorities

The point to understand is that the more time spent analyzing what youhave, what you want and what makes sense, the better. A company thatknows its current process well and has clear expectations will benet fromimprovements much sooner than those less clear on the basics.




All automation projects should result in an improved processotherwise why bother? Invariably, however, we must guardourselves against setting expectations unrealistically high.

One example of an unrealistic expectation is the projectmanager who starts his project with the goal of achieving60% STP (straight-through-processing). Without doubt,all investments require payback but determining the levelor rate of return before doing your homework (see rules 1 to 5)is going to result in disappointment.

Once again, this comes back to knowing your existing processand the process that you want to achieve.

Rule 7Be realistic

A well planned, well executed automation project should, andlikely will, provide a decent return on investment. Having a fewwell chosen KPIs is a great idea — how else will you measuresuccess? But, importantly, don’t focus on the outcome whileneglecting the planning. This way all the opportunities shouldbe possible (with fewer of the pitfalls).




If we’ve tried to show one thing in this ebook, it’s that effectivepreparation makes all the difference when it comes toa successful automation project.

Being clear about the scope. Understanding what you’vegot and how it works on multiple levels. Knowing whatto standardize (and what to centralize). Determining prioritiesand mapping your requirements to prospective solutions.And being realistic in your expectations. These are theingredients to a smoother implementation and greaterlong-term success.

Conclusion:Build the right foundations



Get started with the next stepIf you’re ready to take the next step(or simply want more information),we invite you to visit www.basware.com/purchase-to-pay . Estimate your potentialsavings with the help of our web calculatorand download a RFP template to draft outyour solution requirements. Visit the site here

Discover more at the BaswareResource LibraryFor more information and other downloads

on this topic, make sure you visit theBasware Resource Library

http://www.basware.com/purchase-to-pay



http://www.basware.com/resources

http://www.basware.com/resources






Basware CorporationLinnoitustie 2, Cello BuildingP.O. Box 97, FI-02601 Espoo, FinlandPhone +358 9 879 171Mobile +358 50 573 66 97Fax +358 9 8791 7297www.basware.com



7 golden rules for accounts payable automation

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