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Copyright © 2005 Accenture. All rights reserved. Accenture and its logo, and Accenture High Performance Delivered are trademarks of Accenture. Electronic.

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Presentation on theme: "Copyright © 2005 Accenture. All rights reserved. Accenture and its logo, and Accenture High Performance Delivered are trademarks of Accenture. Electronic."— Presentation transcript:

1 Copyright © 2005 Accenture. All rights reserved. Accenture and its logo, and Accenture High Performance Delivered are trademarks of Accenture. Electronic Invoice & Settlement NASACT Annual Conference Accounts Payable Transformation Bill Kilmartin, Accenture August 2006

2 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 2 Agenda 1.Overview of Electronic Invoicing & Settlements Domain 2.EIPP Strategy and Approach 3.Example of EIPP Applied to a State 4.What does an EIPP Solution Look Like

3 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 3 EIS focuses on automating key transactional elements of both AP and AR, including the assembly, creation, transmission and receipt of invoices electronically. EIS has a compelling value proposition to clients in three key areas: 1.Process automation and elimination of paper 2.Labor savings 3.Cashflow Optimization

4 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 4 EIS addresses key pain points within the financial value chain for both Buyers and Sellers Recon & Analysis Collection Invoice Account Mgmt Offer & Contract Sales & Marketing Fulfil Order Manage Order Receive Order Strategic Sourcing Accounts Payable Order Managemen t Strategy Developt Contract Supplier Mgmt Invoice Processing Approval & Query Mgmt Payment & Analysis Order Origination Order Placement Receive Accounts Receivable Customer Acquisition Order Fulfilment Maximize Visibility and Compliance 1-2% Savings Operational Efficiency Improved by 70% Optimize Early Payment Discounts Capture 2% discounts The Procurement to Payment Opportunity Optimize Collections (Reduce DSO) Reduce DSO by 2-10 days Operational Efficiency Reduce costs by 50% Maximize Visibility and Buyer Compliance 10% Revenue Growth The Order to Cash Opportunity

5 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 5 The Electronic Invoicing and Settlement Landscape B2B: Electronic Bill Presentment and Payment (EBPP) B2C EBPP Addresses high volume, and/or high complexity bills Disputes managed on a by line item exception basis rather than a by invoice basis Generally only touches outbound invoices, but can integrate Proof of delivery documentation as well Business-to-Consumer electronic bill presentment and payment Transactions tend to be recurring (credit card statements, utility bills, etc.) but could involve a one-time-only transaction Key industries: Utilities, Telecommunications (wireline, wireless) Insurance and Financing (credit cards), Government B2B: Electronic Invoice Presentment and Payment (EIPP) Focuses on supply chain interactions between businesses trading partners Generally involves multiple documents: mainly invoices, but could also include POs, Change/Acknowledge Orders, Remittance Advice, etc. Pay Anyone Consumer transactions supporting one- time payments Payment methods vary and include check, money wire, etc. Examples include PayPal, C2It and Valid Recurring Bills (Simple) Invoices (Complex) EBPP EIPP Pay Anyone EBPP Key industries: Utilities, Telecommunications, Insurance and Financing (credit cards and leasing) and Distribution, Health care, Government Payment typically requires: 1) matching (to PO, Invoice) 2) reconciliation / adjudication 3) approval and authorization Key industries: Manufacturing, Wholesale, Retail, Government

6 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 6 AR Automation EBPP AP Automation EIPP The Electronic Invoicing and Settlement Landscape

7 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 7 Agenda 1.Overview of Electronic Invoicing & Settlements Service Domain 2. EIPP Strategy and Approach 3.Example of EIPP Applied to a State 4.What Does an EIPP Solution Look LIke

8 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 8 What is the Prompt Pay Discount Opportunity? Employees Other Governments (grants etc) Recipients (such as Welfare, Unemployment, etc) Beneficiaries (such as Pension, Worker Compensation) Health and human service providers (such as Medicaid and social service provider organizations) Bond holders Customers receiving revenue refunds Vendor Trade Payables Suppliers already agree to contractual terms and already accomplish prompt pay discount Suppliers already agree to contractual terms but not accomplishing prompt pay discount Suppliers do not yet agree to contractual terms, but probably would if requested Major Payee Groups Vendor Trade Payables

9 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 9 Value Proposition of EIPP: Opportunity to Reduce Cost and Generate Hard Dollar Savings Opportunity Reduce Accounts Payable Operating Costs 40-60% Create value through discounts 1.3%-2% of Spend As-Is To-Be Use of electronic invoices As-Is To-Be Supplier queries Receive Post Invoice Approve Invoice Idle Time Pay % Discounts Opportunity 2 Days Net terms – payment on time No discount opportunity 2% saving on invoice if paid early Day 10Day 30 Incremental Savings Opportunity

10 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 10 Value Proposition of EIPP: Typical Process Challenges Over 50% of invoices arrive at the Accounts Payable for approval after 1 Week. Over 50% of invoices require 1+ weeks for approval. 65% of invoices are entered in the Payables within 1 week of arrival at the Accounts Payable. Over 25% of invoices are paid after the due date. Minimal use of suppliers with early payment discount terms. Significant invoices paid early in advance of due date. There are numerous pain-points within the financial value chain... A holistic financial value chain solution has opportunity to drive benefits for buyers and suppliers.

11 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 11 Supplier Base Suppliers With Negotiated Discount Terms Suppliers Currently Without Discount Terms Opportunity to negotiate more favorable & flexible discount terms Improve process & realize terms Discounts not actively taken Payment outside discount threshold due to inefficient internal process Modify contracts and/or enable suppliers to take advantage of more flexible discount possibilities Prompt Pay Discounts already Realized Currently Without Discount Terms and Paid early Invoice Transaction Base Terms Adopted But Not Realized Currently Without Discount Terms and paid in 30 days Currently Without Discount Terms and paid late 80% 20% 1 2 Low hanging fruit Could these transactions be paid early to earn discounts? Assess rationale for late payment 1. Persuade & enable more suppliers to offer discounts 2. Equip the buyer with the ability to execute on and to control discounts Value Proposition of EIPP: Discount Management Strategy

12 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 12 Value Proposition of EIPP: Strategic Discount Capture Corporate P Card Enforce discount terms through EIPP Individually negotiate discounts Enforce through EIPP Enforce discount terms Through EIPP Buyer Leverage Spend Size H M L L MH Supplier A Supplier B Supplier C Supplier D Group A Group B Group C Manage and monetize discounts across addressable spend L M H

13 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 13 Agenda 1.Overview of Electronic Invoicing & Settlements Domain 2.EIPP Strategy and Approach 3.Example of EIPP Applied to a State 4.What Does an EIPP Solution Look Like

14 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 14 Example Executive Summary (Based on analyzed data set – 9 Month Period) For the 9 month period of analysis Conclusion 1: The State realized 1.38% of discounts on a spend value of $47.3M resulting in savings of $651K ($868 annualized) Conclusion 2: Enforcement of existing terms with current vendors could realize an additional $3.7M in savings.($4.3M annualized) Conclusion 3: Changes in procurement policy and targeting of additional vendors and spend categories could realize $21.7M ($28.2M annualized) Annualized Opportunity* $868K $4.3M $28.2M * 9 Month Analysis ; X 1.33 to annualise, assuming pro-rated spend As-Is Enforcement of existing Terms and improvement in efficiencies Extending terms and improvement in efficiencies

15 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 15 Example Executive Summary Graphical Summary of Analyzed Data Transactions 12K 348K Discount $868K $21.7M Vendors , Spend $47M $1,585M 80% of transactions from 8.7% of suppliers 20% of transactions account for 73% of spend As-IsData set Opportunity Vendors with Discounts Captured Vendors with Discount Terms Total Vendor Data set Transactions receiving discounts Total Transactions data set Spend subject to discounts Total spend in data set Discounts received Discounts opportunity

16 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 16 Agenda 1.Overview of Electronic Invoicing & Settlements Domain 2.EIPP Strategy and Approach 3.Example of EIPP Applied to a State 4.What Does an EIPP Solution Look Like

17 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 17 What a Typical EIPP Software Suite Does Supplier Management Order Management Invoice Management Payment Management Discount Management Payment Approval Remittance Processing Payment Status Funds Movement Payment Audit Supplier Payment Mgt Payment Reports ACH, P-Card, RPPS P-Card Payables Acct CTX Remittance Garnishment Payments Employee Expense Payments PO Delivery PO Acknowledge Advance Ship Notice Supplier Order Mgt Order Mgt Reports Contract PO Mgt E-Invoice Capture Invoice Validation Routing & Approval Dispute Mgt 2/3-way match Attachments Supplier Invoice Mgt Approval Status Invoice Reports Paper Invoice Entry Imaging Integration EDI VAN Invoices Goods Receipt Contract Enforcement Discount Program Mgt Dynamic Discounting (Pay Me Now) Prorated Terms Terms Capture ERP Reconciliation DPO Mgt Reports Supplier Portal Supplier Enrollment Master Vendor Network Supplier Matching & Activation Private Supplier Entry

18 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 18 How An EIPP Solution Works Buyer Supplier Purchasing A/P Materials Management A/R Citibank JPMorgan Chase Wachovia Wells Fargo Northern Trust Disbursing Banks Billing Order Management Order Delivery Delivers Direct, Services, Blanket, and other order types Acknowledgements and ASN support Payment Management Payment Processing Authentication Timing control Remittance Processing Format mapping , EDI, FTP, CTX Other Invoice Management Approval Routing based Auto routing/STP Dispute management Real Time Validation Performed at submission Business rule driven Exception management Invoice Capture Web template, PO Flip eFile/EDI ERP invoice upload Treasury Advanced Discount Management Program Management Supplier groups Program definition Dynamic Capture Execution engine ERP synchronization Terms Management Standard terms Prorated terms Pay Me Now

19 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 19 Where are the discounts coming from? Top Categories* Industrial Equipment & Supplies Paper & Packaging Engineering & Construction Office Products Facilities & Maintenance Services Mix 58% of suppliers 26% of invoices 46% of spend 33% of discounts Broad Participation Suppliers large and small Consider discount leverage *Source: Xign network statistics, 2Q05 Discount Manager customers

20 Finance & Performance Management Electronic Invoice & Settlement Copyright © 2006 Accenture All Rights Reserved. 20 Contacts Bill Kilmartin Mark Howard


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