accounts payable: best-in-class strategies for reducing invoice processing costs and time (2010)

© AberdeenGroup 2010

Accounts Payable: Best-in-Class Strategies for Reducing Invoice Processing Costs and Time

Christopher Dwyer Research Analyst, Aberdeen Group

Nasreen Quibria Senior Analyst, Aberdeen Group

Greg Collins Relationship Manager, Esker USA

© AberdeenGroup 2010 2

Agenda

Introduction and Research Background

Research Findings

Best-in-Class A/P Strategies and Performance

Recommendations for Action


Speaker Introduction

Christopher Dwyer

Research Analyst, Aberdeen Group

Christopher Dwyer is a research analyst in Aberdeen's Global Supply Management practice. He has extensive writing, editing and research experience. He has contributed to and led research efforts focused on complex categories, such as contingent labor, print management, and T&E, as well as driven benchmark studies centered on the procure-to-pay process. In 2009, in addition to leading Aberdeen's contingent labor research, he has also co-led the Global Supply Management’s team coverage in the areas of accounts payable (e-payables) and spend analysis.


Speaker Introduction

Nasreen Quibria

Senior Analyst, Aberdeen Group

Nasreen Quibria is a Senior Analyst at Aberdeen Group. Nasreen’s research spans the financial value chain, including topics from e-payables, treasury and payments, financial and operational risk management, to financial planning, budgeting, and forecasting, and working capital management. Before joining Aberdeen Group, she was Director of Payments at the Association for Financial Professionals (AFP). Nasreen has a track record of leading successful initiatives in financial services and technology industries. Nasreen was a key architect of the Federal Reserve Bank of Boston’s Emerging Payments Research Group (EPRG). Prior to the Fed, she was Director of Product Development and Management at Eliza Corporation where she played a pivotal role in transforming a start-up company to a profitable business. Nasreen holds a B.A. in economics from Wellesley College and an M.B.A. from Boston College.


Aberdeen’s History of e-Payables Research

2010

2008

2006 Accounts Payable: Strategies for Success (December 2006)

Invoicing and Workflow (April 2010)

2009

2007

E-Payables: Accounts Payable Automation (March 2007)

E-Payables: Solution Selection Guide (September 2007)

E-Payables: Electronic Payments and Fraud Prevention (June 2008)

E-Payables: A/P Strategies for Success (September 2008)

E-Payables: Invoice Receipt and Workflow (May 2009)

E-Payables: A/P Rising (September 2009)

E-Payables: Electronic Payments (July 2009)

E-Payables: Invoice Receipt and Workflow (March 2008)


o Aberdeen PACE Model Pressures

Actions

Capabilities

Enablers

o Strategies and Tactics

o KPIs – Usage and Specifics

o Follow-up Surveys

interviews

Aberdeen’s Research Methodology


Agenda


Research Findings




42%

35%

23% 14%

14%

20% 31%

21%

Survey Profile

General Manager / EVP / SVP / VP

Director Manager

Other Staff

C-Level Executive

Company Size Job Titles

Midsize ($50 million to

$1 billion

Large (over $1 billion)

Small (less than $50

million)

Survey of 152 companies worldwide


Top Pressures Driving Companies to Focus on A/P

Source: AberdeenGroup

15%

23%

29%

43%

57%

Need to reduce risk of fraud / abuse

Difficulty managing archives of paper-based invoices

Need for better cash management

Corporate directive to lower invoice processing costs

Lack of visibility into invoices / A/P document

Lack of visibility is a top concern of businesses…


The Visibility Factor


Over half of companies have limited to no visibility into A/P processes

5%

15%

32%

48%

No visibility

Real-time

Good visibility

Limited visibility


27%

27%

29%

31%

62%

Conduct internal assessment of current A/P capabilities

Standardize IR&W processes

Centralize A/P processes

Integrate e-payables with other systems

Automate invoicing processes

Top Strategic Actions to Improve A/P


Companies are automating invoice processes


Centralization of Core A/P Functions


30%

34%

35%

36%

45%

49%

79%

Receipt

Approval

Indexing

Scanning

PO Issuance

Reconciliation

Payment

Receipt and approval are the least centralized and biggest bottlenecks


Impediments to A/P Improvement


21%

23%

33%

37%

39%

Securing executive support for A/P transformation

Lack of automation of exception / discrepancy handling

Non-standard nature / multiple formats of invoices

Difficulty with integrating A/P and other systems

Lack of internal support for change


Agenda


Research Findings




Maturity Class Definitions


Definition of Maturity Class

Mean Class Performance

Best-in-Class: Top 20%

of aggregate performance scorers

$4.84 cost to process a single invoice

3.7-day cycle time to process a single invoice

Industry Average: Middle 50% of aggregate

performance scorers



Laggard: Bottom 30% of aggregate

performance scorers




29%

29%

40%

38%

40%

35%

46%

46%

48%

50%

50%

59%

Executive support for invoice receipt / workflow automation

Complete audit trails on demand

Enterprise-level visibility into A/P

Standardized invoice receipt / workflow processes

Quick retrieval of invoice images

Clear policies for invoice receipt-to-payment workflow

Best-in-Class All Others

Best-in-Class A/P Capabilities



Best-in-Class Technology Utilization


15%

20%

14%

7%

23%

29%

24%

24%

30%

32%

42%

52%

Supplier networks

Digital signatures

Supplier portals

EIPP

Spend analysis

Automated invoice receipt / workflow system

Best-in-Class

All Others


Business Case for A/P Automation

Definition of Maturity Class Best-in-Class All Others

Number of invoices processed per month 14,080 9,409

Value of invoices processed per month $67.8m $45.9m

Percent of invoices that are PO-based 63% 62%

Invoice processing cost (single) $4.84 $20.13

Annual invoice processing cost $817,644 $2,273,076

Annualized benefit of Best-in-Class performance

n/a $1,726,656

Payments receiving early payment discount 8.8% 6.0%

Annualized impact of 1% gain in early payment discount capture (at 2/10 net 30)

$164,795 $110,051



Agenda


Research Findings




Why Does A/P Automation Matter in 2010?


Visibility, visibility, visibility

Standardization of internal processes

Leads cost containment efforts

Link to other functional areas

Spend intelligence




Review current receipt and approval policies and identify major program gaps





Look to automation as a means of not only improving A/P processes, but also catapulting this function to a strategic level






Close the loop with data integration






Close the loop with data integration

Utilize the A/P function to drive spend visibility


Order to Cash and Procure to Pay market leader

22 years of field experience, 240 employees

More than 2.5 million users

3,000+ SaaS customers world wide

80,000+ document management servers installed world wide

Over 3 billion pages processed each year

25% of Esker’s employees are dedicated to product development

Esker is a recognized leader in helping organizations eliminate paper

and improve business processes with on premise and on demand

document automation solutions. Specializing in the Cash Conversion

Cycle, Esker helps organizations automate sales orders, accounts

receivables, purchasing, and accounts payable from end to end driving

productivity, efficiencies, and profits.

Esker Awards and Accolades

Esker Highlights

2005 Codie Awards Finalist for “Best Document

Management Product or Service”

Included in “Cool Vendors in

Knowledge Support,” by Gartner.

Patented received for Esker DeliveryWare Rules Engine

They Quit Paper & Software

They Quit Paper

“Esker does the best job at linking capture with DOM. It considers capture

as important as creation and delivery and brings these together to address

pain points in sales order processing and invoice management.”

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http://www1.actelion.com/en/index.page?

http://www.pepperidgefarm.com/home.asp

http://www50.sap.com/index.asp

http://www.microsoft.com/

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http://www.manpower.com.au/default.aspx

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http://www.surescripts.com/index.aspx

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Why SaaS Makes Sense for AP 1. Capital vs. Operational

AP is a “non-revenue generating function”

Lowers up-front investments (brings Enterprise solutions to SMB)

Ability to execute an automation initiative with minimal IT support

2. Decentralized / Distributed Processes

Scan and enter invoices remotely

Expand approval workflow to all company locations

Securely

With audit trail

No additional ERP licenses required

3. Control & Visibility

Overcoming the Catch 22

Additional headcount

BPO – business process outsourcing


Stages of AP Automation

Package A: Paper based - Invoice archiving and indexing

Package B: Imaging Enabled - OCR functionality

Package C: Touch-less AP - Payment approval workflow


Thank You!

Steve Smith Vice President of Sales Americas Tel 608-828-6110 Fax 608-828-0100 [email protected]

Greg Collins

Sales Manager, Americas

Esker, Inc. § 1212 Deming Way § Suite 350 § Madison, WI 53717

Tel § 608.828.6000

Fax § 608.828.1000

[email protected]

For more information on Accounts Payable Automation,

please visit http://www.apondemand.com

OR Call us at 1-800-368-5283

http://www.apondemand.com/


Q&A and Contact Info

For More Research Please Visit:

www.aberdeen.com

Christopher Dwyer, Research Analyst

Global Supply Management, AberdeenGroup

[email protected]

617.854.5280

Nasreen Quibria, Senior Analyst

Financial Management and GRC, AberdeenGroup

[email protected]

617.854.5379

accounts payable: best-in-class strategies for reducing invoice processing costs and time (2010)

Economy & Finance