E- Invoicing Strategies for PO and Non- PO Invoices. Chris Rauen, Solu0ons Marke0ng Manager - Ariba

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1 E- Invoicing Strategies for PO and Non- PO Invoices Chris Rauen, Solu0ons Marke0ng Manager - Ariba

2 Controlling a Rogue Invoice Ron from a marketing company submits an invoice. Invoice Invoice Mary in AP receives a call from Ron about a missing payment. The invoice never arrived, so Ron must send the invoice again. There s no PO # on the invoice, so Mary must contact Rob. John works in marketing. Ron calls him asking for a purchase order. Mary said no PO, no pay. Sept 5 th Nov 20 th Nov 25 th Nov 28 th Ron finally receives the payment a3er more than 4 months! He is not happy. Back from vacacon John finally completes the GR. The invoice arrives with no GR. Mary contacts John for the missing info. Unhappy,Ron prints and sends the invoice again, this Cme correctly with the PO #. Jan 15th Jan 3 rd Dec 5 th Dec 1st So... Ø Ron (supplier) is feeling irritated and hassled...he will not forget this easily Ø John (requestor) is annoyed by the bureaucracy and disappointed that a promising relaconship has been damaged Ø Mary (AP clerk) has to spend a lot of Cme sorcng things out for Ron

Mary said no PO, no pay. Sept 5 th Nov 20 th Nov 25 th Nov 28 th Ron finally receives the payment a3er more than 4 months! He is not happy. Back from vacacon John finally completes the GR.

3 How Do You Compare? Best-in-Class (Top 20%) Industry Average (Middle 50%) Laggard (Bottom 30%) Invoice processing cycle time: 5.3 days Invoice processing cost: $7.78/invoice Early payment discounts captured: 60% of eligible invoices Invoice processing cycle time: 10.2 days Invoice processing cost: $12.05/invoice Early payment discounts captured: 9% of eligible invoices Invoice processing cycle time: 24.5 days Invoice processing cost: $37.45/invoice Early payment discounts captured: 2% of eligible invoices 3 Source: Aberdeen Group, E- Payables 2011 Report

2 days Invoice processing cost: $12.05/invoice Early payment discounts captured: 9% of eligible invoices Invoice processing cycle time: 24.

4 Building a Business Case - Metrics Comparing average processing costs Paper vs. electronic Clean vs. excepcon PO vs. non- PO Average Cme from invoice receipt to approval Paper vs. electronic Clean vs. excepcon PO vs. non- PO Payment processing efficiencies ReducCon in late payments Increase in discount capture ReducCon in excepcons/discrepancies Increase in FTE efficiency (number of invoices/fte/day) Learn more: h[p://resourcecenter.aberdeen.com/gl/28- invoice- management 4

non- PO Payment processing efficiencies ReducCon in late payments Increase in discount capture ReducCon in

5 Classifying Invoices PO Invoice Non- PO Invoice Invoice Arrival Centrally Field or Centrally Invoice Coding Invoice Approval Receipts Common ExcepCons Not required (done before the buy) Not required (done before the buy) Receipt required in ERP depending on PO Type Price, QuanCty, Receipt, part variances Spend Control Higher Lower By central AP or the requestor Handwri[en or with electronic workflow assistance Not Applicable Invoice is OperaConally Approved Requestor not obvious, inadequate approvals, incorrect codes, lost Spend Visibility Line Level No line level, limited visibility to invoices in process, inaccurate accruals 5

Control Higher Lower By central AP or the requestor Handwri[en or with electronic workflow assistance Not Applicable Invoice is OperaConally Approved

6 Smart Invoice Network BUYERS Buyer Portal Supplier Portal SUPPLIERS Procurement Finance Back Office Systems EDI, cxml Direct Sales/Mktg Billing SRM Buyer/P2P PO AutomaCon Invoice AutomaCon Payment AutomaCon GLOBAL NETWORK PO- Flip, Contract- Flip Indirect HTML, CSV Complex Paper / Fax AP IT Ø Ø Ø Ø Ø Ø Electronic feed of all invoices Ø PO, contract, receipt matching Ø Scanning and workflow Ø ReporCng and analyccs Ø Detailed remi[ance Ø Real- Cme transaccon status Ø 6 Invoice archival VAT compliant AR Improved cash forecascng Supplier self- administracon Easier reconciliacon CollaboraCve cash management IT

Ø Ø Electronic feed of all invoices Ø PO, contract, receipt matching Ø Scanning and workflow Ø ReporCng and analyccs Ø Detailed remi[ance Ø Real- Cme

7 PO- Based Invoicing: Wide AdopWon Upfront approval of goods and services (not post procurement) Compliance with purchasing policies and negocated pricing Ø Lowers cost of goods and services Increase ability to control maverick or ad hoc spending Improve visibility into spend as it happens and compare against budgets in real- Cme Though PO- based invoicing has many benefits, there are challenges: Ø Incorrect or incomplete informacon on POs leads to invoice errors Ø POs a3er the fact just to comply with policy Ø Missing goods receipt document lengthen the processing cycle 7

it happens and compare against budgets in real- Cme Though PO- based invoicing has many benefits, there are challenges: Ø Incorrect or

8 When To Do Non- PO Invoicing? Procurement of services where you can t escmate price/quancty upfront Small dollar purchases where the expense of approving and issuing a purchase order cannot be juscfied Challenges with non- PO invoicing Ø Approval is a3er the fact - goods and services already procured Ø Invoice roucng challenges, especially for distributed organizacons Ø Lengthens the processing cycle if mulcple people have to approve 8

expense of approving and issuing a purchase order cannot be juscfied Challenges with non- PO invoicing Ø

9 Value of Electronic Processing of Non- PO Invoices Line level capture Analysis and Action Touchless routing Automated or more intuitive account coding Eliminate data entry and exceptions Cloud approval (Mobile device or client) Compliance (Non-PO or even Blanket POs) Faster and more accurate accruals Job enrichment 9

data entry and exceptions Cloud approval (Mobile device or e-mail client)

10 Smart Invoicing Approach The best invoice soluwon is the one that is TOUCHLESS! Drives auto post rates of 98% compared to less than 60% with other approaches þ Lower AP/AR Cost þ Faster Cycles þ Lower Risk GLOBAL TRADING PARTNERS Customer ERP AP PO Pay Account Coding Contract & Receipt Match Price & Tax Compliance Sub Total & Total Amount PO- Line Change Line & Total ConsumpCon Thresholds Shipping & Tax Thresholds GST/VAT Compliance PO & PO- Line Match Buyer Match (non PO) UOM & SKU Change Currency Match Invoice Number Bill To/ Ship To PO Number Requestor (Non PO) Invoice Date Invoice Supplier Supplier Supplier Supplier Supplier 10 VAT / GST IDs Faster billing and receivables processing at lower cost

Account Coding Contract & Receipt Match Price & Tax Compliance Sub Total & Total Amount PO- Line Change Line & Total ConsumpCon Thresholds Shipping & Tax Thresholds GST/VAT

11 Field- level ValidaWon at point of PO and non- PO Invoice Submission Level III Level II Level I Immediate and clear explanaton of Level I excepcons 11

12 Intermediate PO and non- PO Line Level, Change and Tax VerificaWon Level III Level II Level I Immediate and clear explanacon of Level II excepcons 12

13 Account Coding, Matching and Compliance Level III Level II Level I Tax Variances Account Code Variances Goods Receipt (3- way match) Variances 13

14 Mobile Invoice Approval 14

15 Invoice Approval Efficiency à Maximize Discount Savings 3% Reduce your invoice approval cycle and Avoid late payment fees Capture prenegocaed discount savings $1-3 million per $1 billion in spend Discount Rate 2% 1% Smart Invoicing Reduce Invoice Cycle Time Paper Invoice Approvals Days 2012 Ariba, Inc. All rights reserved. 15

$1-3 million per $1 billion in spend Discount Rate 2% 1% Smart Invoicing Reduce

16 Smart Invoicing Results EQUIPMENT MANUFACTURER GLOBAL INVESTMENT BANK Before A3er Before A3er Huge A/P staff for manual P2P processing Large volume of non PO invoices Lack of global spend visibility Risk over ability to conform to VAT requirements Lost discounts 75% reduction in A/P headcount 90% global spend Networked Improved price, vendor, and VAT compliance Capturing prenegotiated discounts Reduced vendor management costs High cost of paper-based, manual invoice processing Difficulty in managing orders generated by SAP Interest in improving system ease-of-use Enabled 4K suppliers onto Network Reduced BPO costs by 35% Now processing ~ 500k invoices/year electronically Went from 100% paper to nearly 60% e-invoicing with goal of 80% electronic Drive 70% of invoice transactions off POs WATER TREATMENT HOUSEHOLD PRODUCTS Before A3er Before A3er Lack of visibility into orders and invoices 5% lost POs 7 FTEs just to track orders Order/Invoice process delays revenue Invoice exceptions cause raw materials or equipment delays 2012 Ariba, Inc. All rights reserved. Reduced Days Sales Outstanding (DSO) by 5 days Improved PO and contract matching to invoice Redeployed 6 employees Eliminated vendor credit holds since all POs and invoices now visible and managed Expanding solution deployment to Europe 16 Paper invoice costs too high Unable to deliver and monitor PO s through SAP Too many missed discounts due to long invoice process times Poor on-time payment statistics Need one global system 970 supplier relationships established in < 1 year Handling 12K POs and 15K invoices per month Self-service Supplier Portal reduces costs PO-Flip option virtually eliminating invoice exceptions 99% straight-through processing much better option than build solution ourselves in SAP

Reduced vendor management costs High cost of paper-based, manual invoice processing Difficulty in managing orders generated by SAP Interest in improving system ease-of-use Enabled 4K suppliers onto

17 Q&A Free Business Case Assessment PO, Invoice and supplier ramp assessment Discount savings estimate Business case and ROI Download free copy: Beyond EDI: How a Smart Invoice Network Reorders P2P to Drive Global e- Invoicing and CollaboraWon with All Suppliers at h[p:// Chris Rauen SoluCons MarkeCng Manager Ariba Network & Finance SoluCons crauen@ariba.com Learn more about e- invoicing success: h[p:// invoicing_success 2012 Ariba, Inc. All rights reserved. 17

h[p://www.ariba.com/resourcelibrary Chris Rauen SoluCons MarkeCng Manager Ariba Network & Finance SoluCons +1.650.390.

Boost the performance of your Accounts Payable and Treasury departments thanks to the Ariba Network

Boost the performance of your Accounts Payable and Treasury departments thanks to the Ariba Network Franck Dupas, Business Networks Executive / SAP France September 9th, 2015 Optimizing Payables Via Invoice