Everything you ever wanted to know about eInvoicing but were afraid to ask'

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Everything you ever wanted to know about
e-Invoicing but were afraid to ask.

• Northern Lights IAPP February 15, 2007

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Some Statistics

• Paper is stubbornly entrenched
• Critical information is not collected, data is
  poorly organized, and systems are not well
  integrated

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83
Domestic
14
International
86
Electronic
Paper
Source Aberdeen 2006 A/P Benchmarking Survey
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Some more
Source Aberdeen 2006 A/P Benchmarking Survey
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Goals for A/P Managers
Source Aberdeen 2006 A/P Benchmarking Survey
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Whats Your Problem?
EDI strategic suppliers
Paper everything in between
Volume of invoices
P-Card (nuisance spend)
Low Volume Suppliers
High Volume Suppliers
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So Why Do We Still Have So Many Paper Invoices?

• Cost and time required to change (both buyers
  suppliers)
• No industry standards Buyers Suppliers use
  different accounting systems
• Regulatory compliance differs from country to
  country
• Computers which were supposed to eliminate paper
  just make it easier to print invoices!!

Volume of invoices
volume of invoices by supplier
Distribution of suppliers
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Historical Attempts to Solve the Problem

• Scanning (for data entry from image)
• Outsourcing
• OCR
• What do all these have in common?
• They dont eliminate the paper!
• Why spend all that money to take something that
  STARTED as data, convert it to paper, and then
  convert it BACK to data?
• An invoice starts life as data!

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So, What is e-Invoicing?

• Invoice arrives from a supplier in electronic
  format which can be uploaded directly into ERP,
  processing systems and/or workflows-rather than
  on paper
• No touch-points No mail room prep, delivery to
  AP, AP data entry, scanning, indexing etc.
• Biggest bottleneck in processing is time between
  invoice receipt and when it is entered in system

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What e-Invoicing is NOT

• Email delivery of a scanned image
• Then printing it out so it can be keyed in.
  Hello?
• Having paper invoices sent to an outsourcer for
  keying
• More efficient handling of paper invoices
• Scanning
• OCR

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Why is e-Invoicing hot?

• Continual pressure to reduce operating costs
• Investors management in the private sector
• Taxpayers politicians in the public sector

E-Invoicing greatly reduces or eliminates the
risk associated with loss, delay and human error

• Complex compliance requirements
• Taxing authorities in EU
• Transparency, visibility accountability in the
  US (Sarbanes-Oxley) certification of internal
  controls

• Paper invoice processing undermines both
  drivers
• People/Cost Intensive
• Error Prone
• Slow

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How it works
E-Invoice service provider

• Receives invoices from seller
• Validates invoice fields
• Validates tax compliance
• Stores electronic images in a secure online data
  warehouse
• Transmits invoices to buyer

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The Challenge Facing Buyers
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The e-Invoicing Solution
Suppliers export invoice data from their existing
systems in the format of their choice, or enter
invoices on a web-form.
Electronically translate the data into the format
of the buyers choice.
Buyers connect once to receive ALL invoices from
ALL suppliers
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Invoices Delivered in Buyer Format
Financial System
Any Accounting System
Supplier
Auto Match
Supplier
PO Transaction
Check or ACH
A/P System
Non PO Transaction
Supplier
Work Flow Approval G/L Allocation

• Data Transformation
• Validate
• Enhance
• Re-format

Supplier
Web Form
Supplier
Requisitioner
Payment Remittance
Supplier
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Its not that difficult to start

• No new Hardware (no annual maintenance)
• No new Software (no annual maintenance)
• Limited IT Involvement
• No Professional Services
• Works seamlessly with ANY accounting system (on
  either end)
• Supplier contact, enrollment in the program and
  all technical details are handled by someone
  else!

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The Immediate Benefits
Supplier
Electronic
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How E-Invoicing E-nables

• Same day receipt of invoices
• 100 of data, 100 accurate
• Reduced exceptions
• Validation before delivery
• Virtual Centralized Receipt
• Immediate visibility into current liabilities
• Full control over when to pay
• This has perhaps the biggest implication in terms
  of dollars lets see how

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Three Ways to Save Your Company TONS of

• Dynamic Discounting
• Paying within terms
• Float stretch management
• I guarantee your CFO, Controller and/or Treasurer
  will be all ears!

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Dynamic Discounting Concept

• Vendors will accept a discount, sometimes
  substantial, to get their money now
• Cash flow reasons, primarily
• Vendors see a list of invoices in a vendor portal
  which are ready for payment, then click Pay me
  now
• Available discounts can be throttled up or down
  depending on your cash
• So popular that a run on the bank is possible!

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A graph!
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Dynamic Discounting Example

• 500 million in spend
• 60 PO, 40 non-P.O.
• 50 auto match on PO
• 500mil x 60 x 50 150mil
• 500 mil x 40 200mil
• 350mil available x 2 7,000,000
• 7,000,000 x 5 avg 350,000

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Paying within Negotiated Terms

• How many of you capture 100 of the negotiated
  discounts across your spend?
• Have you ever calculated what that is?
• 500 mil in spend, lets say 20 of that is 2/10
  net 30 2,000,000
• You do the math

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Float Stretch Management

• Vendor base with no discount terms
• Net 30, but how often to do pay sooner?
• 27 days, 20 days, 15 days?
• A Charming vendor, with a friend in AP?
• Pushy inquiry calls?
• Pay on exactly the 30th day
• Either discount or we will pay to terms
• ethical stretch

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This all sounds great Kevin, BUT

• Its worthless unless the suppliers participate!
• Whats in it for them?
• No more printing, stuffing, mailing, postage
• No more delays
• No more Did you get my invoice?
• If it requires a lot of effort on their part,
  they are much less likely to participate
• No hardware or software installation
• Does not change their normal routine
• If done correctly, participation rates of 75-85
  of invoice volume are very achievable

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Keys for Supplier Participation

• Strong and Clear Message, with a consequence
• Proactive Follow-Up With Suppliers
• An Effective Enrollment/Enablement Process
• Regular Reporting Visibility into The Process
• Managing Your Partner Carefully
• Arranging Performance Guarantees

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Keys for Successful Implementation

• Executive Sponsorship
• Well defined vision for AP how e-Invoicing fits
  within/supports that vision
• Clearly Defined Goals Objectives
• Cross Functional Support
• Strong Project Champion
• Rigorous Project Management
• Communication, Communication, Communication

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Youre in Good Company
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Thank you
Kevin Burney Director of Sales, Central US Tel
415.772.8095 Cell 920.342.0812 Fax
415.956.7811 Email kevin.burney_at_ob10.com