Ap outsouring on the rise webinar final

1. Accounts Payable
Outsourcing On The Rise:
Keys to a Successful
Implementation
Eric Liebross
Senior Managing Director of
Business Transformation
WEBINAR July 14, 2021
Dan Day
Managing Director of
BPO Operations

2. 2
Agenda for today...
• Market trends and what's driving the increase of finance outsourcing
• Latin America as a destination for finance services and cost savings to expect
• Benchmarking your AP Department and incorporating automation
• Defining what to outsource and what to retain in AP
• Key lessons learned for a successful outsourcing migration
• Some real-world success stories
• Answer your questions!

3. 3
After emerging from the pandemic, Finance Executives are
focusing on performance and efficiency in their operations
Most organizations stated that
"standardization & process efficiency"
was their top strategic objective in 2021,
knocking "reducing costs" into the #2 spot
60% of traditional finance tasks are now
automated, up from 34% in 2018,putting CFOs at the
front line of digital transformation, with 72% of CFOs
now having the final say on the appropriate
technology direction of the enterprise
75% of CFOs believe their company is on a course
to redesign how people work and reinvent
their culture to support new behaviors and
mindsets
Less than 30% of technology transformations are
considered “successful” while only 16% of organizations
said that Digital Transformation has successfully improved
performance in a sustainable fashion
A third of CFOs worry that digital investments will be
wasted because their organizations lack the skills and
competencies to fully leverage technology & automation
Sources: Deloitte 2021 Global Shared Services and Outsourcing Survey; 2021 Accenture CFO Now Research Report; 2018 McKinsey, The Keys to
a Successful Digital Transformation”; PwC CFO Pulse Survey, March 2021; CPA Practice Advisor, May 2021
F&A roles were ranked as the 5th hardest to fill in the
US, while about a quarter of CEOs said they had already had
to cancel or delay a key strategic initiative in the
past 12 months because the right people were not available to
execute it

4. 4
AP is generally an area that is ripe for improvement but the
"vicious cycle" of manual work makes it difficult to optimize…
Lack of Standardized
Processes
Only 20% of AP departments
have standardized their processes
enterprise-wide​, causing high invoice
processing exception rates
Late Payments due to often
Inaccurate Invoices
Up to 20% of invoices regularly contain inaccurate
or incomplete data, resulting in AP staff
spending 25% of their time handling supplier
inquiries & chasing down missing info
Sources: APQC, Aberdeen Group, JP Morgan 2019 AFP Electronic Payment Survey, Robert Half, Parker + Lynch
Too Much Paper &
Manual Processing​
65% of bottom performing organizations
still receive non-electronic invoices,
and 42% of companies
are still making payments by check
Lack of Operational Visibility​​
Most companies lack real-time visibility
to volumetric data, exception rates, pending or
duplicate invoices, status of vendor inquiries, etc.,
to proactively improve performance and
working capital
High Turnover &
Increasing Wages
More than 8 in 10 F&A
managers worry about employee
retention in the current market,
with companies spending an
average of ~$16K to replace an
accounting clerk and over $20K to
replace a senior accountant.

5. 5
All these challenges are driving an increasing adoption of
finance outsourcing with P2P leading the way...
Sources: Deloitte 2021 Global SSC & Outsourcing Survey; 2021 Grandview Research BPO Market Report; 2020 Global
F&A Outsourcing Industry Report by Report Linker, Robert Half 2021 F&A Salary Guide
65% of successful organizations include
outsourcers in their delivery model, with 60%
of Finance teams leveraging a hybrid shared
services/outsourcing model
The global BPO market is expected to have
a CAGR of 8.5% from 2021 to 2028
The Nearshore P2P Outsourcing segment
alone is projected to grow over 26% in the
next 5 years
More finance organizations are turning to flexible
staffing and BPO outsourcing for these top 5 reasons:
Scale the team faster
Access specialized talent
Add flexibility
Alleviate burden on full-time staff
40%
37%
34%
34%
32%
Access support for special projects

6. 6
Your responses coincide with these market trends...
What best describes the stage of your AP
outsourcing journey?
What would be your main drivers for considering
outsourcing your AP?
Reduce
costs
71%
53%
24%
12%
53%
Improve
quality &
automation
Free up my
internal team
for higher
value
activities
Get access to
a more stable,
qualified pool
of talent
Other
Exploring
Actively looking to oursource
Already outsourcing - Happy with my Provider
Already outsourcing - Looking to Switch Providers
74%
12%
9%
6%
Source: Webinar Registrant Responses to Auxis' AP Outsourcing Webinar July 14, 2021

7. 1. What are the biggest challenges impacting your current AP operation? Select all that apply
Manual processing causing backlogs, errors, vendors on hold, etc.
Poor visibility to metrics and performance
Lack of standardized processes/too many exceptions
Cost of the operation
Finding & retaining good talent
70%
40%
33%
27%
17%

8. Demand for Greater Collaboration and Value Add Services
has driven the rise in Nearshoring
• Cost savings is a given but is not the sole
driver
• Outsourcer brings best-in-class
technologies and best practices to drive
innovation and high performance
• Nearshore enables a collaborative
approach where outsourcer serves as an
extension of your team
• Close to home with similar work schedules
and cultural affinity
VS
• Driven by labor arbitrage
• “Black Box”- lack of control and
visibility over the operation
• Quality concerns - Hard to
collaborate and drive innovation and
continuous improvement
• Significant time zone &
geographical differences with
language and cultural barriers (Asia-
based)
Traditional Outsourcing Outsourcing that works!

9. 9
Latin America has emerged as a key destination for
Finance Operations for the Americas...
• Geographic Proximity
• Time Zone
• Large & Strong Workforce
• Cultural Affinity
• Language Skills
• Lower Cost
• Lower Turnover than Asia
• Strong Infrastructure
Primary Drivers
Latin America represents 28% of
the “Top 25” Global Outsourcing
Destinations (Tholons)
Latin America
Eastern Europe
North America
South and East Asia
 Lowest cost in the globe
 Most common global
destination for low-value,
transactional processes
 Significant time-zone and
cultural differences with the
Americas
 Pan-Regional solution for
Americas
 30% to 60% labor arbitrage
compared to US
 Used for both low and high
value activities
 Regional solution for US
and Canada
 High cost – not convenient
for a global solution
 Nearshore solution for Europe

10. 10
Costa Rica has been consistently
ranked as the #1 nearshore
destination in Latin America
• #1 English proficiency in Latin America
• #1 Education System in Latin America with the highest literacy rate (98%)
• Strong services sector with consistent growth year over year
• Central Time Zone with quick direct flights to most major U.S. Cities
• Strong Cultural Affinity to the US
• #1 Country in Innovation in LatAm by Global Innovation Index (2017), and ranked 15th in the world by
Tholon in 2021 (ahead of the US and India)
• No Army! It was abolished in 1948
• Safest City in Latin America - recognized worldwide for its politically stability and peace.
• Solid Infrastructure & Utilities with 100% power and Telecom redundancy

11. 11
Over 170 World-Renowned Multinationals
have established Services Operations in the country

12. Polling Question #2
2. Do the benefits of nearshoring make outsourcing more appealing to you?
Somewhat
A lot
Neutral
Not really
44%
28%
25%
3%

13. 13
Savings Opportunity Roadmap
30%-50% 10%-20% 10%-20%
One to one comparison of
the total labor cost of a
resource in US vs. a
Nearshore Location
ONE TO ONE LABOR
SAVINGS
Most times the org structure
can be releveled to achieve
better span of control
Efficiencies gained from
centralization, process
improvement and
automation (e.g. RPA,
Operational Analytics, etc.)
ORGANIZATIONAL
RESTRUCTURING
PRODUCTIVITY
EFFICIENCIES
It’s not just about labor arbitrage…

14. 14
Average Savings for AP (US vs. Costa Rica) are in the
range of 35% to 40%, equivalent to $20K to $30K per head
Source: 2021 Robert Half Accounting & Finance Salary Guide for the US. Total Annual Cost includes Robert Half Salaries plus 25% benefit load plus $6K/year in office space per role
AP Clerk Senior AP Clerk AP Specialist/
Lead
Total Annual Cost
in the US
(National Average)
$66,453 $87,703
$21,141 $25,453 $29,703
38% 38% 34%
Expected Savings
$56,141
Multiple markets in the US
would yield even higher
savings because their salaries
are above national average by:
• San Francisco/NY – 41%+
• Boston – 34%+
• Chicago – 24%+
• Dallas – 11%+
• Miami/Atlanta – 6%+

15. 15
Benchmarking Your AP Organization
What is The “Right” Level of Performance?
• The characteristics of a “Top Performer”
- Consolidated, centralized and standardized business processes
and systems
- Limited number of transactional variations and exceptions
- Simplified business rules
- Implemented automation solutions to reduce the amount of
manual work being performed
• Does this sound like your organization?
Top Medium Bottom

16. 16
Best Metrics to Track
Accounts Payable
• % of Disbursements Processed
First Time Error Free
• % of Invoice Line Items
Received Electronically
• Cost Per Invoice Processed
Personnel Cost to Perform AP
Per $1B Revenue
% of Invoice Line Items
Matched to a PO
Top
Performer
Median
Performer
Bottom
Performer
Top
Performer
Median
Performer
Bottom
Performer
$250,000
$440,000
$730,000
90% 85% 55%
Effectiveness
Efficiency
FTEs Performing AP Per $1B Revenue Invoices Processed Per FTE Per Year
Top
Performer
Median
Performer
Bottom
Performer
Top
Performer
Median
Performer
Bottom
Performer
3.3
6.8 14.5 9,437
5,000
20,534
• # of Invoice Line Items
Processed Per FTE
• # of Disbursements Processed
Per FTE
• Invoice Processing Cycle Time
• Days Payable Outstanding
(DPO)
Other Metrics Include:

17. 17
P2P Processes that are Good Candidates to Outsource
 Vendor Master Data Setup & Changes
 Electronic Invoice Receipt (Physical invoices
require a lockbox / scanning service)
 Indexing of Invoices
 G/L Expense Coding
 Invoice Processing
 2-Way / 3-Way Match
 Backlog & Exceptions Management
P2P is a great entry point to outsourcing where you have the flexibility to
migrate individual key activities or the entire end-to-end process:
 Payment Preparation​
 Payment Creation​
 Payment Release​
 Vendor Inquiries​
 Vendor Statement Reconciliation
 AP Month End Close Support​
 AP Performance Reporting

18. 18
No matter what AP automation tool you choose, there's always
going to be a manual component that is not going away...
Your Ideal Outsourcing Partner should bring a combination of automation, functional
expertise and the right talent to perform your entire AP life cycle as you need it

19. 19
Accounts Payable Outsourcing Service Models
Platform Dependent Models Turnkey AP Outsourcing Model
Characterized by the vendor providing an Accounts Payable
Application Suite with key services such as invoice processing and
payments provided as an add-on suite of services to the platform.
Business process outsourcer manages the AP function within the
client environment but offshore / nearshore labor arbitrage, process
improvement and technology enhancements drive long term cost
savings and efficiency
• Initial Implementation Costs
• Ongoing Software Licensing Fees
• Data Storage and Archiving Costs
• Per Unit Transaction based pricing
• Initial Migration Costs
• Cost For Ongoing Service
• Optimization based fee reductions
Cons
 Automation & Workflow native
to tools
 Often come with Vendor Portals
 Large suite of providers – lots of
choices to fit different AP
volumes
 Exceptions will still come back to
your team
 No dedicated support team
 Less Flexibility and often higher
cost per transaction
 Good for small and early stage
that need to standup processes
but can get costly at scale
Cons
 Providers bring tools that compliment
clients
 Scalable as volume grows
 Broader range of functions offered
 Better suited for higher volume with
incentives to deliver fee reductions
 Not an "out of the
box" solution
 Deal size minimums
vary by provider
Pricing Model: Pricing Model:
Pros Pros

20. 20
Intelligent Data Capture + Workflow + RPA
End-To-End Automation Example
• Content management and file sharing
• Simplify the process to review and approve
of invoices anywhere, anytime, while
ensuring they remain secure
• AI Data Capture for unstructured data inputs
• Document classification and separation
• Invoice Header level and line by line extraction
• Robotic Process Automation (RPA) to automate repetitive,
manual activities with structured data and clear business
rules
• Used for indexing, invoice processing for non PO, and
3WM for PO
Start
Receive
Invoices/Scan
Paper Invoices
(email)
Classify and
separate
documents
Confident
Results?
Extract Invoice
Data
(OCR and AI)
Manual
Activities
Manually
Confirm Data
and Validate
Supervised
Training of
Ephesoft
(Monthly Effort)
Index Invoice in
Document
Management
System
Route Invoice
for Approval
Log in to AP
Module
Approve and
GL Code
Invoice
*This specific application is not mandatory, but a document
repository solution is required to achieve this automation.
Enter Invoice
Vendor,
Amount,
Coding, etc
PO Invoice?
Save Voucher
Search PO
Number
Match Lines
Between
Invoice and PO
Non
Automated
Exception?
Manage
Discrepancies
End
Automated
Activities
N
Y
N
Y
Y
N
This part of the
process will vary by
company based on
internal processes
100%
touchless (Alternative to an
API integration)

21. Polling Question #3
3. What AP automation tools have you implemented so far? Select all that apply
Self-Service Tools (e.g. Ticketing, Vendor Portals, Workflow)
OCR/Intelligent Data Capture
RPA (Robotic Process Automation)
3rd Party Service for Invoice Receipt/Indexing & Processing
56%
33%
30%
26%
None 15%

22. 22
Real-World AP Outsourcing Success Stories
Global Cosmetics
Manufacturer &
Distributor
Fast-Growing
Ecommerce Retailer of
Outdoor Apparel
Leading
Healthcare &
Hospital Provider
• Highly manual AP environment including
big backlogs, exceptions, errors, late
payments & vendors on hold
• Implemented outsourcing from Costa Rica
for North America Operations across AP, AR
& Accounting
• Achieved initial cost reduction of ~40%
• Implemented multiple process redesign and
automation initiatives (RPA, 3-way match,
ticketing system, etc.) resulting in:
• High-growth retailer based in the West
Coast experiencing significant turnover
and employee burnout in AP team
• Lack of process discipline & automation,
causing high volume of vendors to put them
on hold which impacted revenue cycles
• Rapidly stood up a BPO AP team from
Costa Rica to pilot the nearshore concept
• Cost savings of ~40% including labor
arbitrage and efficiencies from automation
• 25% productivity gains compared to US
AP team (in terms of lines processed)
• 90%+ reduction of vendors on hold
• 99%+ processing accuracy
• Ability to scale and absorb incremental
growth without adding headcount in the
same proportion
• Almost doubled monthly invoice
volume through a recent acquisition
(from 40K to 70K+).
• Manual environment with retention and
quality issues (20+ FTEs)
• Finance leaders got the mandate to
absorb incremental volume without
increasing headcount/cost
• Implemented Intelligent Data Capture
(Ephesoft) and RPA (UiPath) to automate
invoice receipt, indexing, 3-way match
and processing
• Achieved 80%+ touchless AP & backlog
reduction from 4 days to 4 hours
• Freed up team to focus on vendor
management and higher value work
 85%+ productivity gains (in terms of
invoices processed per FTE)​
 Reduced vendor inquiries by 80%
 98% invoice processing accuracy
 Completely eliminated backlog
 Improved visibility through real-time
analytics with PowerBI dashboards

23. 23
Key Lessons Learned for a
Successful Outsourcing Migration
Executive Alignment & Transparency with the AP
Team and Key Stakeholders
1
Establish clear, simple Service Levels and Governance
Process to monitor and regularly discuss Service Level
Metrics (SLM’s) and Key Performance Indicators (KPI’s)
Select a provider that has strong finance subject
matter expertise and innovation agenda.​
• Process improvement & best-in-class tools including: Intelligent
OCR, Workflow, RPA Automation, BI, and Service Management to deliver
long term efficiency gains
2
4 Regular communication between internal teams and
outsource provider. The outsourcer is an "extension of
your team" ​and nearshore facilitates that collaboration.
5
Strong process documentation & migration approach that
goes beyond documenting the "happy path"
3

24. 24
Interested in exploring AP outsourcing or automation?
Schedule Your Complimentary AP Optimization Assessment
• Volumetrics
• # of invoices
• FTEs in AP
• PO vs. Non PO
• Vendor
concentration
• % of exceptions
• Org Charts
• Systems being used
• Process docs
• Current SLAs
• Payroll & Tools Costs
• 2-hour remote meeting
with Operating
Management and Subject
Matter Experts to review
the current AP process
and identify key areas of
opportunity
• Define recommended
tools & approach
• High level solution
design & business case
• Present
recommended opportu
nities including time
and cost to implement
1-2 weeks
Data Gathering High Level Process
Walk-Through
Analysis &
Recommendations
Using a combination of process walk-throughs and data analysis, we can quickly assess the current state and “pain-
points” of your AP operation, define how automation can be applied, and what could be the potential business case of
incorporating outsourcing and/or automation to your current model.
For those interested in scheduling or if you have any questions, please contact fabiana.corredor@auxis.com
Benefits you will get from
your consultation:
• Benchmark your current AP
performance versus your industry
peers (e.g. Invoices processed per
FTE, cost, accuracy, etc.)
• Identify specific opportunities for
improvement including automation
in your system environment
• Confirm the feasibility and business
case of nearshore outsourcing for
your organization
• Understand other potential
candidates for outsourcing outside
AP (e.g. AR, General Accounting)

25. We’re looking forward to
speaking with you!
Eric Liebross
Senior Managing Director of
Business Transformation
Eric.liebross@auxis.com
Dan Day
Managing Director of BPO
Operations
Dan.day@auxis.com