The document discusses the benefits of automating accounts payable processes within an organization. It outlines major benefits such as improved visibility of invoices and payments, increased productivity through faster processing, and better management of working capital. Additional benefits include enhanced supplier relationships, improved audit and compliance, and opportunities to analyze spending patterns which can reduce costs. The conclusion emphasizes that automating accounts payable delivers efficiencies while also allowing staff to focus on more strategic tasks.

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Unveiling the Benefits of Accounts
Payable within an Organization
March 22, 2012

2. Agenda
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Introduction
Major Benefits
Other Benefits
Conclusion
Questions

3. Introduction
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• Role of AP in organization
Better Visibility and reporting
• Importance of AP
10.0%
6.0%
25.5%
15.9%
• Benefits of AP Automation
Lower Costs
Faster Turnaround
18.3%
24.3%
Fewer Errors
No Benefit Gained
Better Management of
Working Capital
• Other Benefits

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Major Benefits of Accounts Payable

5. Improved Visibility
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Facilitates Centralization
Allows for ‘real time’ status of invoice
Improves approval and dispute resolution
Increases customer service
Backlog management
Identifies control or audit issues

6. Accounting Process
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• All invoices accounted for in tool
• Proper accrual recorded at month-end
• Invoices available for review
• Facilitates the audit process

7. Improved Productivity
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Invoices captured immediately
Invoices handled one-time
Helps balance peak demand
Visibility to disputed invoices
Reduces time-to-enter
Allows for the development of AP Rep metrics

8. Workload Balance
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Bottleneck Management
Invoice queues optimally structured
Management of peak volumes
Flexible among AP team
Reporting available
Published metrics

9. Efficiencies with ERP System
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Interface to current ERP system
Automated matching of PO based invoices
Online G/L coding of invoices
Allows team to focus on root cause, corrective action, and
streamlining processes
• Links established to supporting documentation

10. Improved Quality
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• Avoids degradation of reputation
• Enhances departmental productivity
• Minimizes duplicate processing and payments
• Improves Customer Satisfaction

11. Supplier Satisfaction
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• Reduction of credit holds
• Avoids potential price increase
• Favorable for development of long-term
relationships

12. Backlog Reporting
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• Increased accuracy of backlog reporting
• Provides for ‘true’ volume of backlog
• Visibility to potential bottleneck
• Facilitates root cause and corrective action

13. Best-in-class
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• Starting point for best-in-class
• Phases of invoice scanning and workflow
• Successful completion of each phase
• Overall goal

14. Globalization/Centralization
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• Allows for one central point for processing
• Enhances visibility
• Standardization of processes

15. Polling Question #1
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The globalization and centralization of the accounts payable
process will provide all of the following benefits except:
a)
b)
c)
d)
One center point of processing
Guarantee that the cost-per-invoice will decrease
Facilitate the standardization of polices and procedures
Enhanced Visibility

16. Polling Question #1
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The globalization and centralization of the accounts payable
process will provide all of the following benefits except:
a)
b)
c)
d)
One center point of processing
Guarantee that the cost-per-invoice will decrease
Facilitate the standardization of polices and procedures
Enhanced Visibility

17. Lower cost per invoice
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• Compare ‘apples-to-apples’
• Efficiencies gained for reduction of data entry
• Integration into ERP systems
• Reduction of disputes

18. Audit and Compliance
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Real-time access to invoices
Efficiencies from electronic storage
Month-end accrual process
Supporting Documentation
Establishment of business rules
Identification of duplicate payments

19. Fraud Prevention
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Due diligence – vendor setup
Rounded amount invoices
PO Compliance
Invoices below an approval amount
Utilization of positive pay
Check requests

20. Customer Service
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Eliminates lost invoices
Provides visibility
Workflow
Allows for quick response from AP Team
Real-time access to invoices
Facilitates dispute resolution

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Other Benefits of Accounts Payable

22. The People
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• Analytical versus transactional thinkers
• ‘Soft’ skills training
• Reward and recognition

23. Polling Question #2
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Hiring the people with the required level of competency will
provide all of the following benefits except:
a)
b)
c)
d)
Focus on analysis and exception handling
Increased level of customer service
Efficiencies gained through reduction of headcount
Increased volume related to data entry

24. Polling Question #2
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Hiring the people with the required level of competency will
provide all of the following benefits except:
a)
b)
c)
d)
Focus on analysis and exception handling
Increased level of customer service
Efficiencies gained through reduction of headcount
Increased volume related to data entry

25. Root Cause and Corrective Action
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• Analytical thinkers
• Identify “true” cause
• “How can we do this process more efficient?”
• Streamline processed related to disputes, overpayments,
duplicate payments, and payment to wrong vendor.

26. Improved Working Capital
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• Three components of working capital: inventory, accounts
payable, accounts receivable
• Flexing payment terms and timing of payment runs
• Payment terms based on actual receipt of product
• Critical expenses
• Supply Chain Finance (SCF)

27. Managing Discounts
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• Formula used to analyze discount strategy:
Effective Annual Rate of Return Formula
Discount
100% - Discount
Total Period
Days Saved
• Scenario: A vendor provides a 1.5% discount if paid within 10
days:
Effective Annual Rate of Return Formula
1.5% 10, net 30
1.5%
100% - 1.5%
Rate of Return
365
(30 - 10)
27.8%

28. Prevents Late Payments
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• Invoice sent direct to requisitioner
• Critical payments such as utilities, tax,
lease and rent
• Working capital strategy communicated
with supplier

29. Debit Balance/Escheatment
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• Debit balances result in overpayment to supplier
• Timely follow-up for debit balances
• Escheatment or unclaimed property
• Uncleared checks address within 30 days of issuance
• EFT’s eliminate escheatment

30. Polling Question #3
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Debt balances and the escheatment process, should be managed
through all of the following techniques except:
a)
b)
c)
d)
Timely follow-up with the supplier
Decreased amount of EFT’s
Resolve uncleared checks, 30 days after issuance
Handle escheatment process per the state regulations

31. Polling Question #3
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Debt balances and the escheatment process, should be managed
through all of the following techniques except:
a)
b)
c)
d)
Timely follow-up with the supplier
Decreased amount of EFT’s
Resolve uncleared checks, 30 days after issuance
Handle escheatment process per the state regulations

32. Due Diligence
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• Established controls for invoice processing
• Aligned with Generally Accepted Accounting Principles
• Tied to the Foreign Corrupt Practices Act (FCPA)
• Support documentation including approvals

33. Improved Teamwork
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• Strong partnership with purchasing and operations
• Work together to resolve disputes and to develop corrective
actions
• Communicate working capital plan to Treasury

34. Green Solutions
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Supporting Documentation
Out-of-cycle check requests
Positive pay files
Real-time access to invoices
Procurement Card statements, reports, and receipts
Travel and Entertainment statements, reports, and receipts

35. Metrics
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Cost Per Invoice
% of disputes
Cycle time to process
% of discounts taken
% of electronic invoices
# of duplicate payments
# of late payments
Invoices processed per FTE
# of electronic payments

36. Conclusion
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Importance of the accounts payable function
Analytical versus transactional thinkers
Total working capital
Automation and technological solutions
Streamline and efficient processes
AP is the last stop prior to a payment being sent to a supplier

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Questions?
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