How To Improve Your Invoicing

Transcription

1 Electronic Invoice Management Going with the (Work)flow Q Featuring Insights on... Barriers to einvoice Adoption Underwritten in part by ADP Ariba Bank of America Merrill Lynch Basware Direct Commerce GXS U.S. Bank Making a Case for Automation Usage of AP Automation Challenges in Current AP Operations Factors Driving AP Automation Interest AP Outsourcing Providers & Case Studies

2 Table of Contents Executive Summary...1 Move to the Middle...2 And Now, the Numbers Making a Case for Automation...6 Overcoming Barriers to Adoption...12 ADP...14 Ariba...17 Ariba Case Study...21 Bank of America Merrill Lynch...23 Basware...27 Direct Commerce...31 Direct Commerce Case Study...34 GXS...36 U.S. Bank...39 Conclusion...43 Research Methodology About PayStream Advisors...44

3 Executive Summary Although PayStream Technology Insight reports are grounded in statistics, it is often what we see and hear in product demonstrations that gives us a sense of the market at ground level. Last year, this chatter was all about The Cloud and supplier recruitment. In 2012, we saw more streamlined navigation, more integrated workflow automation, and heard about mobile applications for smart phones and tablets, offering a range of functionality from notifications to simple transactional capabilities. Adoption has been of keen interest among an elite group of suppliers, and innovations like Software as a Service (SaaS), fee-free supplier portals, dynamic discounting, and mobile transactional capabilities, are opening up the middle market. But we still have a long way to go. Consider that there are, say, 15 million businesses, in the United States alone, transacting business with other businesses (B2B), and only 700,000 of those companies are sending invoices electronically. And that s using the term electronic loosely about half of those electronic invoices are electronic paper static scans that must still be converted to data and assimilated into an electronic workflow. That said, there does seem to be a growing acceptance within the industry that einvoicing is not an end in itself, but rather part of a process and a culture involving integrated accounting systems, workflow, communications and supplier management. Earlier this year, PayStream Advisors documented these trends in the einvoicing Adoption Benchmarking Report 2012, based on the responses of more than 300 AP and procurement professionals at U.S.-based enterprises. Subsequent research has followed the trend through the supply chain and found that it holds true from purchase to pay. This report elaborates on those findings by putting them in a broader context. PayStream Advisors has developed this Technology Insight Series report titled Electronic Invoice Management: Going with the (Work)flow, for organizations with an active interest in einvoicing who would benefit from an in-depth analysis of recent trends and solutions, plus profiles of leading solution providers. Electronic Invoice Management is one of several reports available for download from our corporate research library at: eresearch/

4 Move to the Middle Companies with revenues over USD $2 billion ( Titans ) have largely automated... The good news: Titans only represent 10 percent of the invoice volume to be automated. Henry Ijams, Managing Director of PayStream Advisors PayStream Advisors Market Update and Research Preview, Oct. 23, 2012 After more than a decade of market excitement about the coming electronic future, only now are we beginning to move from the long tail of large early adopters into the fat middle market of small and medium-sized enterprises (SME). And, as we reported in last year s report Electronic Invoice Management: The Cloud s Silver Lining, the future looks much different than the past. Figure 1 Adoption of Imaging and Large Medium Small Workflow Technologies by Company Size While large companies lead the pack in automation, small 62% 51% 59% 46% companies are quick to embrace automated workflow. 27% 32% 23% 17% 15% Front-End Imaging Back-End Imaging Automated Workflow Cloud payments, measured at $4.7 billion in 2011, are forecasted to more than double over the next four years, as the buyers and vendors of the middle market increasingly find common ground in the fast, flexible, affordable and mobile internet future. The technology has been proven. The results of the larger companies are there for all to see. The challenge now is to replicate those results across a broader spectrum of companies with cultures and processes that become increasingly ad hoc as you move down the revenue range.

5 Integration, more than new functionality with the possible exception of mobile applications is the order of the day. If an invoice comes in electronically without a system in place to route it through accounts payable, you re really not much better off than you were with a paper invoice. As the saying goes: It s not what you do, it s how you do it that counts. This convergence of einvoicing with Workflow Automation is the story of 2012.

6 And Now, the Numbers... Any discussion of adoption, logically begins with a look at what we are up against, and while resistance, overall, is decreasing, the barriers themselves remain, proportionally the same, with supplier resistance, the perennial favorite, still on top, followed by the persistent belief that the old ways work best, and, as always, the We can t afford it, argument. It should not be surprising then, to see solution providers focusing aggressively on supplier recruitment and affordable Softwareas-a-Service delivery models. Figure 2 Barriers to einvoice Adoption 2012 survey results reveal that supplier resistance is the number one challenge to electronic invoice adoption. Lack of Budget We do not think there will be an ROI Lack of understanding of current available solutions 6% 16% 15% Lack of resources to manage automation 18% Supplier resistance 25% Current processes work 20% This adaptability seems to be paying dividends as more than 70 percent of companies surveyed have either adopted or are evaluating einvoicing technology up 3 percentage points from 2011.

7 42% Figure 3 Adoption of einvoicing 29% Solutions Over 70 percent of 21% companies surveyed have either adopted or are evaluating einvoicing technology. 8% We are currently using such a solution We are currently deploying such a solution and will go live within the next 6 months We are evaluating the usage of a solution We do not use an e-invoicing solution and have no plans to implement one

8 Making a Case for Automation Culture is Critical With the possible exception of archiving, a static electronic invoice isn t much better than a paper one. The real value of einvoicing lies in how successful you are at assimilating invoice data into accounting systems and management workflows. It is this culture of integration that will yield the best return on investment. Figure 4 Adoption of Workflow Technologies More than 80 percent 37% 35% 34% of the companies surveyed by PayStream 27% 27% Advisors over the past year responded they have adopted an imaging solution, or are considering purchasing 16% 15% one. 9% We currently use an approval workflow solution We are currently deploying an approval workflow solution and will go live in the next 6 months We are considering implementing an approval workflow solution We do not have a workflow solution and have no plans to implement one More than 80 percent of the companies surveyed by PayStream Advisors over the past year responded they have adopted an imaging solution, or are considering purchasing one.

9 Using Implementing In 6 Months Figure 5 83% 84% Usage of AP Automation Technologies epayment and P-Cards 56% 53% continue to hold the lead in AP automation technologies. 24% 37% 30% 27% 17% 16% Front-end Imaging OCR/Automated Data Capture Automated Workflow Electronic Payments Purchasing Cards The volume of paper invoices received is also decreasing dropping from more than three quarters to just a little under two thirds of total invoices, in the past year alone. Figure 6 Methods Used to Trade B2B Invoices 59% Paper invoices are decreasing; however, they continue to lead the pack in methods used to trade B2B invoices. 22% 13% 6% Paper einvoice/portals/edi Fax

10 Historically, the move from paper to electronic invoicing has been driven by the accuracy and efficiency of workflow achieved by eliminating manual data entry and the time-consuming routing of hard-copy invoices for approval. The current wave of automation, however, is being driven by a variety of factors. More than half of companies that adopted einvoicing solutions cited a reduction in full time employee (FTE) or processing costs and faster approval cycles as key system benefits, along with a broader application of einvoicing solutions as management information tools to provide greater visibility into spending, improved cash management, and an increased ability to capitalize on early-payment discounts. Challenges Faced in Current AP Operations PayStream s Invoice Automation Adoption Survey 2012 documented the challenges that current AP operations face. The good news is that significant progress is being made. The first step toward improving a process is understanding the faults and failures of the current system. But as the following graph illustrates, much remains to be done. Figure 7 Challenges in the Invoice Management Process Majority of invoices received in paper format 52% 65% Decentralized invoice receipt 17% 16% Lost or Missing invoices 18% 14% Manual data entry and inefficient processes Lack of visibility into outstanding liabilities 13% 11% 43% 40% High number of discrepancies and exceptions Inability to approve invoices in time to capture discounts 24% 19% 16% 15% Factors Driving Interest in Automation As accounts payable departments become more centralized, companies are reaping the benefits of stronger trading relationships, dynamic discounting, risk-

11 management and cash management. Automation solutions that enable trading partners buyers, suppliers and banks to seamlessly exchange transactionrelated information and funds are becoming increasingly popular. Specific factors driving interest in automation include: A competitive business environment is forcing businesses, especially small and medium-sized ones, to focus on reducing processing costs and increase efficiencies associated with invoices and employee expenses. Streamlining the AP process has become vital in a tough economy where adequate cash flow and greater control over payables are critical to maintaining liquidity and sustaining business operations. Increased interest in early payment discount capture drives smaller organizations in particular to investigate tools and technologies that enable them to compress their invoice receipt-to-approval cycles. Figure 8 Top Financial Automation Goals for 2012 Automated approval workflow and einvoicing are the top two automation goals for Increase electronic invoicing Implement invoice imaging Automated approval workflow for Invoices Automate payment processing 14% 19% 28% 29% ERP application upgrade 8% Outsource portions of AP process 2% Buyer Benefits of AP Automation Buyers, particularly small and medium-sized companies, are responding to the low upfront costs, minimal IT commitment, enhanced reporting and cash management services offered by Cloud-based solutions. It s true that for some companies, the Cloud isn t always an option. In particular, some larger companies and governmental entities have policies requiring onsite hosting and/or staff-managed solutions. Still, regardless of platform, PayStream Advisors 2012 Automated

12 Workflow Adoption Survey provides results that make a compelling case for AP Automation: 75 percent of all adopters reported shorter invoice approval cycles 58 percent experienced lower processing costs 50 percent increased employee productivity 33 percent of adopters surveyed had used automation to improve visibility over liabilities 20 percent reported a reduction in late payment penalties and interest 14 percent reported an improvement in regulatory compliance These results are consistent with previous years although most categories show a slight increase. The survey demonstrates a trend toward businesses using AP Automation as a business information and cash management tool and not just a means to reduce head count. Figure 9 Benefits of Approval Workflow Quicker approval of invoices 75% Quicker approval cycles ranks as the top benefit to approval workflow. Increased employee productivity Improved visibility over liabilities 33% 50% Lower processing costs 58% Reduction in late payment penalties and interest 20% Better compliance with regulatory requirements (SOX, FASB) 14% Supplier Value Proposition of AP Automation Suppliers, too, seem to be rallying behind recent value-added services, such as supplier networks, dynamic discounting, purchase order to invoice flips, and low to no-fee supplier transaction costs. Suppliers who have adopted electronic invoicing have reaped a number of tangible benefits:

13 Increased Efficiencies: Significant time is saved when employees do not have to print paper invoices and mail them to their customers, freeing up accounts receivable staff to focus on more value-added activities like collections and customer relations. Lower Costs: Reduction in labor, material and postage costs are common with all einvoicing solutions. Our research reveals that suppliers who adopt electronic invoicing can slash their invoice management costs by more than 50 percent. Error Reduction: Validation rules configured into einvoicing solutions flag errors at the time of submission itself and prompt suppliers to correct them, reducing the number of exception invoices downstream. Faster Settlement: Electronic invoicing shortens the invoice processing and approval cycle on the buyer side. Combined with electronic payments, this ensures that suppliers are paid on time, or in some cases, early. Improved Visibility: Suppliers have real-time access to invoice and payment status from a standard Web browser, providing for quicker handling of reconciliation questions and fewer help desk calls. Better Cash flow Forecasting: Automating invoice processing and payments reduces uncertainties. Consistency around payment timing means suppliers can better perform cash flow forecasting. Eliminate Reprint Requests: Electronic invoicing solutions drastically reduce the number of lost and missing invoices, which means reprint requests from buyers will virtually be zero. Quicker Dispute Resolution: Suppliers now can view disputed invoices at any time and provide supporting/backup documentation as needed, making dispute resolution a collaborative process as well as accelerating resolution. Decreased Days Sales Outstanding: Dynamic discounting and supply chain finance capabilities available as part of einvoicing solutions allow suppliers to decrease days sales outstanding (DSO) without adversely affecting customer relations.»» Access to Cheaper Capital: Dynamic discounting delivers financing at more attractive rates to suppliers than factoring or asset based lending.

14 Overcoming Barriers to Adoption Despite the steady increase in the number of companies adopting electronic invoicing, paper invoices remain the primary method of B2B billing in the United States, see Figure 6. Barriers to adoption today remain the same as they ve always been. Here s where things stand. Supplier Resistance Although einvoicing expedites payments, the very prospect can raise the hackles of suppliers who are content with their paper-based system and not of a mind to change. Twenty-three percent of survey responders cited their belief that current processes work as the main reason for avoiding einvoicing. It can be difficult to overcome resistance from suppliers who believe the saying, if it isn t broke, don t fix it. In this case, the buyer s success depends upon demonstrating to their supplier a compelling value proposition. Suppliers want to know what s in it for them. Buyers need to have a compelling answer. Suppliers will respond positively to evidence that participating in a cloudbased einvoicing solution will result in accelerated payments, new business referrals, enhanced reporting, financing opportunities, and improved cash management. Supplier recruitment also requires an ongoing effort. The steady growth of supplier participation demonstrates the positive results of persistence. Technical Challenges This was once a formidable obstacle. Today, however, the challenge of integrating new applications with legacy systems is becoming less daunting. Most applications on the market today integrate easily with systems on buyer and supplier sides, resulting in secure and seamless data transfer, as well as streamlined processes and more efficient workflows. This trend should accelerate as companies replace older legacy systems with modern architecture, and adopters realize the benefits of faster approval and cycle times, better cash flow forecasting and vendor relations. For those companies concerned with the upfront costs of technology, hosted solutions and Software-as-Service (SaaS) delivery models offer minimal implementation costs. The technology providers are responsible for maintenance and upgrades. Business Practices Old habits die hard. It s human nature. That s especially true in business, where change usually means learning new skills, spending more money, and training. Giving up the old ways is hard enough when change is driven by your own business practices. It can be even more challenging when the change is driven by outside factors. Solution providers have made great strides in recent years addressing this barrier to adoption,

15 making it easier for suppliers to transact compared to legacy EDI solutions including supplier portals to manage transactions and track their status, and providing vendor support services that encourage adoption and minimize disruption. Today, simply allowing vendors to submit electronic invoices by returning or flipping purchase orders as invoices has gone a long way toward breaking down supplier resistance. External Change Begins with Internal Change In negotiating it is often easier to get what you want when you offer something of value in return. Flippable purchase orders the electronic equivalent of business reply mail are a good start. With more than 32 percent of survey respondents indicating that they send more than half of their purchase orders electronically to suppliers, having the ability for suppliers to simply turn those purchase orders around into error-free invoices with the promise of straight-through processing read that: lower processing costs, faster payment, and fewer invoice errors is proving to be a major persuader. And, of course, once the transaction has gone electronic, it opens the door for powerful back-end benefits, such as dynamic discounting, a valuable source of liquidity, especially for small and mid-sized suppliers.

16 ADP Founded in 1949, Automated Data Processing Inc. is one of the world s largest business process outsourcing companies offering a wide range of accounts payable, Human Resources, payroll, tax and benefits administration solutions from a single source. With nearly $10 billion in revenue and over 600,000 clients in 60 countries, ADP employs more than 54,000 associates worldwide. ADP Procure-to-Pay Solutions (ADP P2P) automates the entire payables process from purchase order transmission and electronic invoicing to approval workflow and payments processing. More than 50,000 users in over 50 countries use it to process more than 10 million transactions and $120 billion in spend annually. Website Founded 1949 Headquarters Roseland, NJ Other Locations 50 + countries around the world Employees 54,000 End Users (ADP P2P) >50,000 Annual Transaction Volume Industry Segments Key Accounts >10 million transactions, >$120 billion in annual spend ADP P2P is used across a range of industry segments including oil & gas, retail, financial services, wholesale, real estate, manufacturing and many more. Client confidentiality does not allow ADP P2P to disclose client names. Awards / Recognitions One of four non-financial U.S. companies to receive a AAA credit rating from S & P and Moody s Ranked #1 on Fortune s list of Most Admired Companies 2011 Forbes magazine s list of The World s Most Innovative Companies IDG s Computerworld 2011 list of Best Places to Work in Information Technology Solution Overview ADP Procure-to-Pay Solutions is delivered as a cloud-based Software-as-a-Service offering, which is fully hosted and supported by ADP P2P and seamlessly integrates into clients ERP/accounting/back-end financial systems with no hardware or software installation requirement. ADP P2P also offers other business process outsourcing services including invoice scanning and indexing to create a completely paper-free payables environment for clients.

17 Supplier Recruitment ADP offers active supplier recruitment support. ADP P2P works with clients to analyze their suppliers and segment them to identify the suppliers that need to be on-boarded on the network. ADP P2P offers a comprehensive range of supplier enablement services including vendor analysis, activation campaigns, supplier outreach, training, and supplier self-registration. The ADP P2P supplier network currently supports thousands of suppliers from mom-and-pop establishments to multi-national corporations, making it easy for clients to migrate from paper to electronic invoices. Electronic Invoicing ADP P2P offers suppliers numerous ways to submit invoices. Large volume suppliers can leverage a hands-free B2B integration to submit invoices, while smaller volume suppliers can log into the portal to upload invoice files, flip purchase orders into invoices or key in invoices in the portal. Although 90 percent of the invoices that move through the solution are electronic, ADP P2P also supports suppliers that continue to send paper invoices through its outsourced scanning and data capture offering. Approval Workflow Workflow capabilities include automated routing, flexible approval chains and lineitem level dispute resolution integrated with the clients accounts payable systems. Color-coded alert flags notify users of any discrepancies allowing for swifter and more efficient dispute resolution. That simplifies document management and increases the number of transactions processed without manual intervention. A unique offering of the P2P application is its wide range of configurable business rules and new, advanced coding procedures based on historical data. This key differentiator enables automated coding of invoices based on invoice attributes and how a similar invoice was coded the last time it was approved. This enables clients to allow the system to handle routine tasks, while focusing on the exceptions. Electronic Payments ADP Payments integrates seamlessly with financial and accounting systems and delivers the flexibility of paying approved invoices either via check or electronic methods. Buyers and suppliers have an easy and intuitive interface for maintaining their information within the system, including banking details. Buyers have multiple options for specifying payment terms and schedules, as well as the ability to configure parameters to specific suppliers. Once invoices are approved, ADP Payments automatically creates and schedules payments according to pre-defined supplier payment terms and supplier-selected payment methods.

18 Reporting and Analytics The platform offers multiple prepackaged reports that range from line-item and supplier-level spend analysis to administrative reports that track history, efficiency and status. Standard reports cover areas such as spend analysis reporting, invoice administration, and scanned invoices reporting. All reports run asynchronously, which enables the user to continue processing invoices and working within the system while the report is running. ADP P2P also offers a powerful ad hoc query tool that allows the client to build a report for any field captured on an invoice. Reports can output in a print friendly PDF format or download in a spreadsheet format. In addition, all report data can be easily exported to third party reporting tools like Crystal Reports, for further analysis. Pricing and Implementation Because ADP P2P offers a broad range of scalable modules and configurations, implementation can take anywhere from a few weeks to a few months. The most important factor determining the length of time to implement the system is often the client s availability of internal planning and integration resources. ADP P2P charges an upfront implementation fee and an annual subscription fee based on the number of transactions processed. The more transactions processed through the solution, the lower the average transaction price. After implementation, ADP P2P supports clients via an experienced team that offers support to both clients and suppliers 24x7x365 via phone, , online, and onsite (if required).

19 Ariba Ariba, an SAP company, is the world s business commerce network. Ariba combines industry-leading cloud-based applications with the world s largest web-based trading community to help companies discover and collaborate with a global network of partners. Using the Ariba Network, businesses of all sizes can connect to their trading partners anywhere, at any time from any application or device to buy, sell and manage their cash more efficiently and effectively than ever before. Companies around the world use the Ariba Network to simplify inter-enterprise commerce and enhance the results that they deliver. Ariba Collaborative Finance Solutions cover the Procure-to-Pay process, from smart invoicing and paper invoice conversion to integrated electronic payment, working capital management, and supplier enablement program management. These solutions and services enable global e-invoicing in more than 70 currencies, as well as digital signature authentication, VAT/tax compliance, and data archiving. Website Founded 1996 Headquarters Sunnyvale, CA Other Locations 40 offices in 21 countries, including North and South America, Europe, Asia/Pacific and Australia Employees 2,432 Revenues ~$500M for FY 2012 Customers 800,000 + trading partners End Users ~5 million Annual Transaction Volume >$320 billion + Industry Segments Consumer goods, distribution, financial services, healthcare and pharmaceutical, manufacturing, oil and gas, public sector, publishing, retail, services, telecom, utilities, among others. Key Accounts Key clients are market leaders in our target verticals. A small sample includes AstraZeneca, Bank of America, Entergy, GlaxoSmithKline. Awards / Recognitions Technology Excellence Awards: Leading P2P Technology 2012, PayStream Advisors; Best e-procurement Solution 2012.

20 Partners / Resellers IBM, ScanOne, Logica, TrustWeaver, Hubspan, and Microsoft. BPO providers Genpact, WNS and Accenture. Bank reseller Wells Fargo. The Receivables Exchange for receivables financing. Solution Overview Ariba Collaborative Finance Solutions Suite provides full-circle functionality from supplier enablement and electronic purchase order (PO) delivery to electronic processing of PO and non-po invoices, electronic payments, and dynamic payables discounting. Ariba s solutions are cloud based and scale to accommodate any customer requirements, including global companies with many different systems, myriad document types, thousands of suppliers, billions of dollars in annual spend, and support for many different currencies. Ariba offers comprehensive and flexible integration, including support for Oracle Fusion Middleware, SAP NetWeaver, Dell Boomi Atoms for connecting to 60+ Finance Packages and other middleware that connects back office systems to the Ariba Network and subsequently all participating suppliers. Supplier Enablement Ariba has made supplier enablement a top priority, with more than 400+ professionals involved in the supplier enablement process. The Ariba supplier enablement team brings more than a decade of best practice experience to help organizations develop a supplier enablement strategy that accelerates their transition to electronic invoice processing and maximize their return on investment. Ariba specialists work with suppliers of all sizes and technical limitations, including global suppliers with varying language, currency, culture, and technology needs. With Ariba, select organizations can leverage a quick enablement approach that initiates supplier enablement through transactions like purchase orders, invoices, or payment status documents (remittance advice) on the Ariba Network. The quick enablement process can accelerate the enablement process by reaching out to suppliers especially low-volume suppliers at the best time and with the right message for electronic enablement. Self-service tools in the Ariba Network allow even the smallest suppliers to collaborate online for invoice management via , fax, PO-Flip, or digital integration via cxml and Electronic Data Interchange (EDI) Through a buyer portal, organizations have complete dashboard visibility to the enablement status of each supplier, so they can identify any tasks or activities that require escalation to meet their enablement goals. Once on the Ariba Network, suppliers benefit from a supplier portal, where they can receive electronic POs; submit order confirmations, advance ship notices, electronic invoices and other documents; quickly correct and resubmit invoices with errors; get payment status; enable dynamic discounting; and more.

21 The success of Ariba s efforts is demonstrated by the steady growth of the Ariba Network to more than 800,000 vendors. Electronic Invoicing Ariba smart invoicing enables the system to catch invoice errors based on userconfigurable business rules that perform real-time invoice validation at the header and line detail levels, and perform other valuable capabilities such as automated account coding and contract matching. These advanced invoice validation capabilities are responsible for Ariba clients experiencing 98+ percent touchless invoice processing, and for suppliers having, on average, 6 days shorter Days Sales Outstanding (DSO). In addition to e-invoice submission from suppliers, Ariba s Invoice Conversion Services allow organizations to convert paper invoices to an electronic format for smart invoice processing and thereby achieve 100 percent paperless invoice processing. To expedite global e-invoicing rollouts, Ariba allows users to configure business rules at the country level and apply them to country-specific e-invoice templates. These rules provide valuable support for VAT and other indirect tax methods and for legal regulations governing the invoice process. Business rules are based upon Ariba best practices and expert tax research into e-invoicing legislation by country relating to domestic, cross-border, and intra-eu trade. In addition, Ariba publishes Tax Compliance Country Guides for more than 36 countries in North America, EMEA and Asia-Pacific to further assist buyers and suppliers in deploying a compliant e-invoicing solution. Ariba also offers an e-archive Service, powered by Logica, that helps organizations address the e-archiving requirements of the European Union. Approval Workflow Ariba Invoice Professional is a workflow solution designed for accounts payable that features best-practice templates, so organizations can apply out-of-the-box workflows to manage invoice approvals, facilitate matching of invoices to POs and goods receipt, and enable invoicing off contracts. Ariba workflow supports remote and line-level invoice approvals and complex workflow configurations such as invoices with multiple accounts and different line items requiring approvals from different groups. Rule configuration and testing is integrated into the application, eliminating any need to contact IT for set up and support. And with Ariba s comprehensive workflow reporting, organizations can effectively monitor their invoice approval process across many dimensions. Working Capital Management Ariba working capital management solutions allow organizations to accelerate payments on approved invoices to key suppliers in return for a discount. Buyers earn an immediate return on their cash, and their trading partners can use that cash to fund their daily business needs and ensure that they can meet a customer s ongoing

22 demands. With Ariba s approach, buyers and sellers have all of the tools necessary to fully automate the process of offering, negotiating, and agreeing on early payment terms. Buyers can capture discounts at any point between invoice approval and the net due date and automatically present offers to lock them in. Suppliers can automatically accept offers or control the acceleration of payment on an ad-hoc basis according to their needs. To accelerate results, Ariba offers a rapid ramp methodology for promoting early payment discount offers to suppliers, effectively driving them from paper invoices and paper checks to e-invoicing and electronic payments. With this program, one customer identified close to $1 million in early payment discount savings in weeks. Ariba s collaborative finance approach helps suppliers get early payment at much lower rates than traditional market resources without incurring debt and provides greater leverage for buyers to extend payment terms or negotiate reduced prices. Electronic Payments The Ariba e-invoicing solution supports global payments in over 70 currencies via automated clearinghouse (ACH), or purchasing cards. Standard middleware integration allows Ariba s solution to integrate with leading back office systems to facilitate posting of transactions to accounts payable (AP), accounts receivable (AR), and general ledger (GL) systems. Another strength of the Ariba solution is its ability to deliver remittance information to suppliers in their preferred formats. While traditional ACH remittance detail is at an aggregate level, Ariba offers line-level detail remittance statements, which make it easier for suppliers to match payments to sales. Reporting and Analytics Ariba offers a robust reporting functionality that includes operational, analytical, and extensive search capabilities. Ad hoc reporting allows users to prioritize invoice processing to maximize discount savings potential. Users can manipulate the data to meet their specific needs through an intuitive pivot table and drag-and-drop interface. Ariba also allows data export to third-party reporting tools such as Crystal Reports for further analysis. Pricing and Implementation Ariba s modular design allows customers to implement solutions by function, or as a complete suite to match customer objectives. Implementation timelines vary depending upon the other Ariba solutions that may be a part of the scope, but are generally weeks. Pricing includes annual and subscription fees, and include user support and training as key deliverables of every Ariba solution, as well as round-theclock support from response centers in North America, Europe and Asia Pacific regions. The customer report portal, Ariba Connect, has been recognized as one of the Ten Best Web Support Sites by the Association of Support Professionals.

23 Ariba Case Study GlaxoSmithKline GlaxoSmithKline, the world s third largest pharmaceutical company, manages its accounts payable (AP) operations through a Shared Financial Services group, which delivers services to 95 percent of GSK businesses in North America. As an early adopter of EDI, GSK was able to convert its large suppliers to an e-invoicing process but that still left nearly 50 percent of its invoice volume on paper. Extending EDI coverage to the bulk of its suppliers, and integrating EDI with its existing ERP system, were cost prohibitive. As a result, GSK faced excessively high invoice processing costs for paper invoices, along with longer cycle times and on-time payment challenges. GSK sought a more efficient and effective invoice process that would lower processing costs, reach more suppliers, and enforce PO compliance. Key issue for GSK: How can we effectively transition suppliers submitting paper invoices to an electronic invoice process, and ensure compliance by driving more purchases off POs? Solution GSK realized that e-invoicing was the key to driving down the costs of processing paper invoices and enabling collaboration with thousands of suppliers. It became a strategic initiative, and GSK outlined the following objectives for the program Embrace an electronic process that would enable real-time supplier collaboration Expand use of purchase orders to enforce compliance and better manage spend Extend the value of its ERP system GSK chose Ariba s e-invoicing solution and integration with the Ariba Network to deliver the next wave of corporate finance transformation. Benefits In less than a year, GSK enrolled more than 1,800 suppliers for electronic invoicing and today there are more than 2,300 GSK suppliers on the Ariba Network. The Ariba Network match helped to rapidly on-boarding these suppliers, as close to 60 percent of GSK s list of targeted vendors were already participating on the network. One factor driving these suppliers to an electronic process was the flexible invoice submission options. They include the PO-Flip service

24 option, where suppliers receiving an electronic purchase order from GSK can, with a few keystrokes, flip the PO into a pre-validated electronic invoice that is sent back to GSK for touchless processing. Ensuring PO compliance on the front end makes the back end of invoicing that much simpler, said Al Barbee, director, North America Shared Financial Services, GSK. Suppliers also benefit from a self-service portal offering real-time visibility into invoice and payment status, which isn t available to GSK suppliers transacting via a legacy EDI solutions. The supplier portal has contributed to a reduction in invoice status phone calls to GSK by 30 percent. It s easy for suppliers on the Ariba Network to go online and see the exact status of their invoices at any time, said Al Barbee. You would be surprised at how many calls actually go away. For GSK, the ability to configure business rules the key to smart invoicing enables automatic validation of invoices. Invoices that don t pass the validation rules are returned to suppliers for correction and resubmission, eliminating a time-consuming task that had been managed by AP. Streamlining the invoice process also has a dramatic positive impact on cash management. With an invoice approval cycle of seven days and falling, GSK can take advantage of many more early payment discounts. In addition e-invoicing with Ariba was a major contributor to GSK achieving a 20 percent savings goal in its Shared Financial Services group. Motivated by its first-year results, GSK is planning to roll out e-invoicing to other divisions within the Shared Financial Services group. And, since Ariba offers a more flexible, lower cost e-invoicing option than EDI, GSK will expand the Ariba solution as existing legacy EDI suppliers drop off. Reaping the Rewards Within a year of its e-invoicing implementation, GSK achieved the following results: 60% reduction in invoice processing costs 90% reduction in time to receive invoices (21 days to 2 days) 85% invoice volumes managed electronically»» 94% on-time payment performance (from 70%), with goal in the upper 90% range

25 Bank of America Merrill Lynch Bank of America Merrill Lynch is a leading provider of payment, invoicing, commercial card, and prepaid card solutions to large and middle market companies, globally, and to federal, state and local government entities in the United States. Bank of America Merrill Lynch works with these organizations to design integrated invoicing and epayments solutions that help unlock working capital while increasing efficiency, visibility and control. As part of the Global Treasury Solutions business, the Commercial Card organization develops strategies and solutions that are closely aligned to the treasury goals of commercial and government entities. Bank of America Merrill Lynch cardholders can be served in numerous languages and have access to a worldwide network of more than 34 million credit card merchants and ATMs. As part of its solution set, Bank of America Merrill Lynch offers clients the ability to present purchase order information to suppliers, receive invoices electronically, and approve them with Paymode-X Invoice Management. The system is a Software-as-a-Service (SaaS) solution offering flexible data integration and access to a large network of buyers and suppliers. Website Founded 1784 Headquarters Charlotte, NC Other Locations Offices in 43 countries Employees Over 270,000 full time employees globally Paymode-X End Users 500 corporate and commercial clients and 200,000 active network members Annual Transaction 7 million + payments for over $120 billion Volume Industry Segments Varied, including healthcare, government, entertainment, utilities, service organizations, consumer products, gaming, financial services, agribusiness, industrial, computer, timber, newspaper, automotive, telecommunications, manufacturing Awards / Recognitions For the sixth straight year in 2012, Bank of America Merrill Lynch was named No. 1 in the annual card issuer s identity safety scorecard analysis by Javelin Strategy & Research, rating 26 of the nation s largest credit card issuers on their capabilities to prevent, detect and resolve fraud.»» Bank of America Merrill Lynch Commercial & Corporate Banking Call Centers recognized for An Outstanding Customer Service Experience by J.D. Power and Associates in 2012.

26 Partners / Resellers Bottomline Technologies (for Paymode-X Solution) Solution Overview Bank of America Merrill Lynch leverages Paymode-X to help its clients convert from paper to electronic payments and invoices with a Cloud-based solution, providing access to a large network of buyers and suppliers, dedicated supplier on-boarding services, and a modular approach to solution deployment. Paymode-X allows clients to add services as their needs change and grow. The solution is a web-based solution (no hardware to install, no lengthy implementation, no IT headache), that integrates with a client s existing system and allows desktop access for authenticated users. Supplier Recruitment There are over 200,000 suppliers in the Paymode-X network. A dedicated onboarding manager actively recruits and supervises enrollment of a client s suppliers not already in the network. Bank personnel provide training and ongoing support for suppliers prior to going online and after enrolling. Vendors receive unlimited electronic remittance detail in their preferred format without needing to switch banks. Paymode-X credits and debits to and from any bank. Electronic Invoicing The solution supports multiple invoice submission options for suppliers. Data is integrated into the solution s workflow regardless of the form in which it is submitted. Suppliers can submit invoices electronically via a web template, flip of a PO, data file upload, or data file transmission. The solution also enables suppliers to submit paper invoices through , fax or a PO box where they are imaged and both the images and data are fed into the invoicing portal, allowing users to review the extracted data and scanned image side by side. Approval Workflow The modular solution provides users with flexible and configurable options for workflow processing and approval. Some of the options available include setting thresholds for approval levels, ability to edit GL codes and invoices, ability to automatically route invoices to specific users or queues based on client-defined criteria, detailed identification of exception handling tolerances at the line item level, and the ability to automatically approve invoices based on PO matching criteria. The matching capabilities of the solution can identify invoice discrepancies which can be flagged and routed to users for review. The matching criteria are user-defined to help ensure maximum flexibility for each client. The solution also offers an interface for a payer to send messages to a supplier to correct invoice discrepancies and collaborate when an invoice needs correction or needs to be resent.

27 Bank of America Merrill Lynch works closely with clients during implementation to be sure that the approval and workflow rules as defined meets the clients specific business needs. Once invoices are reviewed and approved online the invoicing information is fed directly to the clients AP or ERP system The file format of the electronic invoice feed is customized for each client, with technical requirements for the automation of the invoice entry process. Dynamic Discounting A key differentiator of Paymode-X is the solution s ability to support dynamic discounting. The system enables both buyers and suppliers to initiate an offer for a dynamic discount. The supplier can specify a discount and a deadline date during creation or transmission of an invoice. The buyer has the ability to decide to accept the offer and initiate early payment or decline the offer and pay on normal terms. Buyers also have the ability to initiate discount offers on approved invoices with maximum flexibility. The system supports advanced concepts that allow a client to introduce multiple discount offers to their suppliers. Advanced functionality allows for a discount offer to be altered without introducing problems for invoices already in process. When clients elect to use the Paymode-X dynamic discounting module, suppliers are made aware of early pay opportunities via the Paymode-X website. Notification is sent advising suppliers they have a discount offer to review. Electronic Payments Paymode-X can support a single file, multiple payment type integration with its clients. In addition to being able to make electronic ACH payments and send electronic remittance, bank clients can integrate card payments into their single file. The system can also initiate payment by check, card and wire. Reporting and Analytics Paymode-X provides users and suppliers access to a suite of online reports to view payment, purchase order and invoice history and status information. The solution enables users to create custom reports at both a basic and advanced level of search, depending upon user needs. Reports can be filtered by a variety of criteria. Data can also be exported into a variety of offline analytic tools, such as Crystal Reports. Most reports can be exported in a variety of formats including XML, Excel, PDF and custom. Implementation and Pricing Bank of America Merrill Lynch assigns an Implementation Project Consultant to each project to provide each client with a dedicated resource to guide them through the process. The consultant works with the client to determine the detailed workflow and integration processes that work best for their unique needs. Clients can typically start to receive electronic invoices approximately weeks from the time they provide their file and workflow requirements.

28 During implementation, training is provided to familiarize clients with the system and functionality prior to going live. After the project transition live customer support is available from 8 AM to 8 PM Eastern Monday through Friday via phone and . The fee structure for this solution is a combination of an up-front set-up fee, transaction fees and a monthly license fee. Client specific pricing is used based on client volume and products purchased. Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation ( Investment Banking Affiliates ), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are registered as broker-dealers and members of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed Bank of America Corporation.

29 Basware Basware is the global leader in cloud based e-invoicing and purchase-to-pay solutions with more than 1,200,000 users in over 60 countries. Basware s B2B Cloud solutions and services provide an open, secure and global ecosystem for buyer and supplier collaboration, connecting more than 1.9 million buyers and suppliers globally. The solutions are architected to meet the needs of SMEs and global enterprises and are built upon Basware s deep knowledge and experience of B2B financial processes, coupled with intelligent cloud connectivity and the Open Network. With Basware, organizations benefit from more efficient procurement, accounts payable and accounts receivable processes; sustainable cost savings; better insight to cash flows; and improved buyer-supplier relationships. The solutions are available via the cloud, onpremise or through business process outsourcing in the U.S., Europe and Asia-Pacific through an extensive network of Basware offices and business partners. Website Founded 1985 Headquarters North American HQ Stamford, CT Other Locations World HQ in Espoo, Finland, 10 offices in Europe and Asia Pacific Employees Customers End Users 1,200,000+ Annual Transaction Volume Industry Segments Key Accounts Awards / Recognitions Partners / Resellers 1,700 and 800,000+ active buyers/suppliers in Open e-invoicing network 35+ Million Annually All IKEA, Whole Foods, Sonic Drive Ins, Panasonic, Heineken, NASDAQ, Caterpillar, Alcon, ABB, Cargotec, ING, Global Industries, Apache, Children s Hospital, Adventist Healthcare Best EIPP Service Provider by Global Finance Magazine ; Pros to Know ; Best Supplier Support and Enablement 2011, 2012; Top 100 Companies by Supply and Demand Chain Executive SAP, Microsoft, Cintas, EMC, Oracle, Ricoh, Cannon Solution Overview In 2012, Basware launched Alusta, a cloud-based platform for business-to-business transaction collaboration. Alusta is the Basware platform that underpins and powers the B2B Cloud, an open, secure and global commerce ecosystem for buyers and sellers. It streamlines, optimizes and accelerates transaction collaboration, improving purchasing and invoicing processes, and delivering enhanced supplier relationships