Found Money -

1
Found Money - Making Accounts Payable Pay Off
September 24, 2009
2
Agenda

• The changing role of Accounts Payable
• Industry statistics on AP performance
• Why you cant run AP today like you did in the
  past
• Why ERP systems alone are not sufficient
• What is the answer to improving AP performance
• QA

3
Times have changed
4
Times have changed
5
Times have changed
6
Times have changed
7
Times have changed
8
Times have changed
9
How has AP changed?
Then
Now
10
What is the role of AP?

• Accounts payable is a strategic, value-added
  accounting function that performs the primary
  non-payroll disbursement functions in an
  organization. As such, the AP operation plays a
  critical role in the financial cycle of the
  organization. AP enables an organization to
  accomplish its objectives by bringing a
  systematic, disciplined approach to evaluate and
  improve the effectiveness of the entire payables
  process. In addition to the traditional AP
  activities whereby liabilities to third-party
  entities (suppliers, vendors, taxing authorities,
  etc.) are recognized and paid based on the credit
  policies agreed to between the company and its
  suppliers, today's AP departments have taken on
  much wider roles including fraud prevention, cost
  reduction, workflow system solutions, cash-flow
  management, internal controls and vendor (supply
  chain) financing.3
• IAPP

11
The Focus in AP is shifting

• Then
• Processing transactions
• Now
• Working to drive costs down and predictability up
• Cash management/working capital/liquidity
• Fraud prevention
• Vendor relationships
• Visibility and control

12
AP Processing Averages

• Time to Process
• 6.6 days, on average
• Cost to Process
• Over 50 report at least 10 to process a payment
• Over half of these report over 20!
• Compliance and Audit
• Over 50 report extreme difficulty measuring and
  managing their processes

IOMA
13
AP Processing Averages

• Invoice Exceptions
• Non-PO 12 - adds average of 4 days
• PO 15 - adds average of 6 days
• Invoice Volumes
• 69 of companies report invoice volumes are
  increasing only 9 report a decrease
• EDI and e-Invoicing
• Only 9 of invoices significantly impacted

IOMA
14
Erroneous payments

• Estimated at 0.2 to 2 for average company
• 2 billion AP spend 2 - 20 million
• 100 million AP spend 200k - 2 million
• 50 million AP spend 100k - 1 million

IAPP
15
Payments to Suppliers

• Large companies are paying slower (avg 58.9 days)
  and collecting faster (41.0 days)
• This increases short term cash, but can result
  in
• Higher prices
• Supply chain disruptions
• Poor quality and service
• Damages 2nd tier suppliers
• Competition suffers
• Duplicate payments
• Vexed vendors

Data from Q2 2009
16
What are APs major headaches
17
Why you cant continue to run APlike you have in
the past

• Its the economy what a revelation!
• Capital is hard to get cash is king!
• Staff reductions
• Manual processes do not contribute to
  efficiencies
• Vendor relationships can be strained in a tight
  economy
• Fraud is more likely with reduced staff
• Visibility and control is key to liquidity

18
Is ERP alone the answer for most companies
process problems?

• The evidence leaves little doubt that for
  most companies, ERP has failed to meet
  expectations or deliver on its value promise.
  It's hard to find an expert who thinks otherwise.
  Based on our data, only a select few companies
  have gotten value out of their ERP
  implementations, and those are the world-class
  companies. The value for the average company is
  still many years away, says David Hebert, who
  leads The Hackett Group's business advisory
  services program in application ROI."
• The problem is not your ERP its the process

19
Is ERP alone sufficient for AP process
efficiency?

• What is the promise of ERP?
• Standardization of the entire business process
• A central repository for all relevant business
  process information
• Active, direct support of and participation by
  business experts
• Not all relevant process information and
  activities are controlled by or managed by ERP

20
The solution is AP Invoice Automation

• Application of imaging/workflow technology and
  business process change to the entire vendor
  payment cycle, with the goals of
• the reduction of manual steps
• the elimination of redundancies
• the shortening of process cycle time
• improving visibility and control
• reduction in transaction costs

21
ERP and Integrated Workflow

• Benefits of ERP and Integrated Workflow
• Process efficiencies from automation
• Standardization of entire process
• Process effectiveness using workflow as delivery
  mechanism for relevant documents and data
• Participation by business experts regardless of
  their physical location
• Process visibility and control from end to end

22
Why should it be Important to your Organization

• Faster
• Eliminate dead time shorten process cycle and
  delayed approvals
• Cheaper
• Minimize data entry time to reduce costs,
  eliminate lost discounts, better terms
• Better
• Standardized process offers better controls,
  liability recognition, visibility, cash management

23
Invoice Automation in Best of Class Companies
Performance Area Best in Class Companies
Invoice Processing Costs 91 lower
Process cycle time 46 shorter
Late payments 12 fewer
Staff time responding to inquiries 30 less
Aberdeen Group
24
AP Invoice Automation Process

Accounts Payable Business Process
Scan/Capture
Advanced OCR
Workflow Routing
Create Vouchers
Archive
25
AP Invoice Automation almost hands free
26
Integrated AP automation process improvement
outcomes

• Avoid duplicate payments
• Better support for segregation of duties
• Cash management/working capital/liquidity
• Unrecorded liabilities recognized sooner
• Prompt payment discounts/negotiate favorable
  terms
• No lost documents
• Improved audit support
• Fraud prevention
• Reduce backlog/smoother closings
• Better data to manage the business using KPIs
• Headcount reduction in AP (typically redeploy to
  value-add areas of your business)
• AP job satisfaction (from clerical to analytical
  role)
• Upgrade your work processes and upgrade your
  employees jobs
• Drive out costs
• Drive up predictability
• no invoice left behind

27
JDE Case Study 1

• Accounts Payable
• Manufacturing company
• North America and European payables
• JDE World
• 125 A/P staff in multiple locations
• Implemented shared services with workflow to
• Reduce costs/long approval cycles
• Standardize operations

28
Case Study 1 Benefits

• Faster
• Reduced approval times weeks to days to hours
• Cheaper
• Manual content reduced by over 50
• Fewer errors and lost documents
• Better
• Standardized process end-to-end
• Performance metrics visible and measurable

29
JDE Case Study 2

• Accounts Payable and Billing
• US Construction company
• North America and Latin American operations
• JDE EnterpriseOne
• 100 construction project locations
• Implement single ERP with IIS workflow to
• Manage high volume of project expense items
• Shorten billing preparation improve receipts

30
Case Study 2 Benefits

• Faster, cheaper, better
• Rapid project managers approval for AP expense
  items
• Reduced approval times from weeks to days
• Improved billing speed and accuracy 75
• Electronic bill presentment to customers
• Faster receipts (AR) and fewer disputed invoices
• Revenue recognition 1 month earlier
• Process is auditable, measurable

31
AP AutomationBenefits Summary

• Cheaper reduced cost per transaction
• Reduced manual content
• Reduction with Adv Cap to 75.
• Better manage liabilities, cash management,
  compliance
• Faster AP experts handle exceptions, time to
  work with strategic suppliers

32
DocuSpheremore than just softwareresults!
AP Related Cost Reductions from DocuSphere Automation AP Related Cost Reductions from DocuSphere Automation AP Related Cost Reductions from DocuSphere Automation AP Related Cost Reductions from DocuSphere Automation AP Related Cost Reductions from DocuSphere Automation AP Related Cost Reductions from DocuSphere Automation AP Related Cost Reductions from DocuSphere Automation AP Related Cost Reductions from DocuSphere Automation AP Related Cost Reductions from DocuSphere Automation
indicates input field
indicates "payback" input
Invoices per month Invoices per month 4,000 4,000

Current Cost DocuSphere
Total Cost Benefits Total Cost Benefits Total Cost Benefits Process Reduction Automation "Elimination" Benefits

Cost per invoice Cost per invoice 12.00 25 9.00 Inter office AP mail

Monthly AP cost Monthly AP cost 48,000 36,000 Savings/month -

Savings/month Savings/month 12,000 Paper filing, storage

Savings/year Savings/year 144,000 Savings/month -

Other
Prompt Payment Benefits Prompt Payment Benefits Prompt Payment Benefits Prompt Payment Benefits Improvement  
factor Savings/month -
Avg. Invoice Amount Avg. Invoice Amount 1,500 1,500

w. PP terms w. PP terms 20 30

Avg. PP discount Avg. PP discount 1.0 1.5 Est'd AP vendor payments Est'd AP vendor payments

Avg. PP amount Avg. PP amount 15.00 22.50 6,000,000 monthly

Potential discount/mo. Potential discount/mo. 12,000 27,000 72,000,000 yearly

Qualifying Qualifying 10 8 80

Actual discounts/mo. Actual discounts/mo. 1,200 21,600

Savings/month Savings/month 20,400

Savings/year Savings/year 244,800

33
Thank You

• Questions?
• Thanks for your time and attention

34
Learn more
Visit us at www.DocuSphere.com Future
webinar and event information www.DocuSphere.com
Contact me for a live demo ron.kelley_at_docusphere
.com