Accounts Payable Automation. Realize Sustainable Benefits with a Well-constructed AP Automation Strategy. wns.com

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1 Accouts Payable Automatio Realize Sustaiable Beefits with a Well-costructed AP Automatio Strategy ws.com

2 Accouts Payable Automatio Realize Sustaiable Beefits with a Well-costructed AP Automatio Strategy

3 Accouts Payable Automatio Realize Sustaiable Beefits with a Well-costructed AP Automatio Strategy AP Automatio The Market for Paperless Tools Political ad ecoomic turmoil, the sovereig debt crisis i the Eurozoe ad the tsuami i Japa i 2011 created volatility i commodity prices ad disruptio i supply chais across the globe. This led to geeral ucertaity ad impacted busiesses, the world over, slowig dow recovery across both developed ad developig markets. Although, global ecoomic prospects are gradually improvig, dowside risks are ot allowig ecoomic growth. A recet Grat Thorto Iteratioal Busiess Report predicts growth is projected to drop from about 4 percet i 2011 to about 3½ percet i Withi this eviromet, pressures to realize real cost savigs cotiue to itesify. Accouts Payable (AP) automatio ca be a aswer to the delivery of such real short-term efficiecy savigs. A Hackett 1 report established that top performers are processig over 40,000 ivoices per FTE per aum, whereas o-top performers are processig less tha 10,000. With reduced cycle times also comes the opportuity to ear early paymet discouts, the potetial value of which is highlighted i a early 2006 Acceture report Dyamic Discoutig Trasactio cost savigs of 50 percet are ot eough. WNS BizAps leadig capabilities i this area were highlighted as far back as 2008 i the Paystream Report 'Dyamic Payables Discoutig ad Supply Chai Fiace A Buyers Guide to Workig Capital Solutios. I a Jauary 2011 article o 'Curret Treds i Paperless Receivables', Craig Vaream, Maagig Director, J.P. Morga Treasury Services, states that the movemet to paperless receivables is beig drive by three factors: The eed to become more efficiet, especially i a tough ecoomic cycle The eed for better risk maagemet ad busiess cotiuity program Advaces i electroic techology Why a Strategy? The market today is filled with solutios purportig to deliver paperless, problemfree processig of supplier ivoices but to pick the solutio(s) which would make sese for you, you eed to cosider: The particular pai poits i your curret process The willigess ad ability of the busiess to maage chage The readiess of suppliers to adopt differet ways of workig The suitability of differet solutios for differet supplier categories Aligmet with your techical ifrastructure ad skills Do the sums add up? What are the relative costs ad beefits? 1 AP Performace ad the Role of Automatio, December 2009 ws.com 01

4 It is also importat to adopt a holistic approach through makig referece to the whole purchase-topay cycle based o the maxim 'Good purchasig meas easy paymet'. 'Good purchasig' i this cotext meas: Supplier ratioalizatio Good cotract coverage ad compliace High PO compliace Negotiated early paymet discouts Establish Clear Goals ad Objectives Alig your AP goals with corporate goals ad priorities. If the corporate drive is for sales growth, the perhaps ow is ot the time to drive major chage i the 'back-office'. Is there a budget available? What are the primary objectives of automatio? Is it simply cost reductio, o-time paymet, improved supplier relatios, discout realizatio, audit compliace, fraud cotrol or a combiatio of all of these? Uderstad Your Busiess Aalyze your data. Gai a real uderstadig of your process dyamics do you have too may fiace (o-po) ivoices? Do you make duplicate paymets? Do you pay o time (ot just o average)? How do you compare to idustry bechmarks? Who is resposible for ivoice etries how efficiet are they? Questios You Should be Askig Yourself What is your level of PO compliace? Do you eed to ratioalize your supplier base? Should you have a cetral AP fuctio? How much does it cost your orgaizatio to process a ivoice today? Which categories of suppliers accout for the greatest share of the cost? How log does it take to process a ivoice? Could you move to self-billig with key suppliers? Who are your 'problem' suppliers? How much time do you sped aswerig supplier equiries? What is the value of available discouts that are missed due to delayed processig or approvals? How may ivoices do you expect to receive each year for the ext three years? What are the stregths ad weakesses of the relatioships betwee AP ad the lies of busiess? How log is the tail of ifrequet suppliers? Do 80 percet of your ivoices come from 10 percet of your suppliers? WNS advises orgaizatios what data to extract (ad how) from their Eterprise Resource Plaig (ERP), ad the aalyzes the data ad reports fidigs. Bechmark agaist the Best-i-Class Kow Where You Should Be WNS has access to a rage of bechmark metrics to help your orgaizatio establish realistic target levels of performace. Efficiecies will be based o the types of solutios you are able to effectively deploy. E-ivoicig, Self-billig ad Purchase Cards are amog the most labor-efficiet solutios. OCR ad image scaig are perhaps the most flexible. With certai categories of supplier, a self-service portal may be the best ivoice etry mechaism. 02 ws.com

5 Accouts Payable Automatio Realize Sustaiable Beefits with a Well-costructed AP Automatio Strategy What Ca AP Automatio Do for Your Orgaizatio? Below is a list of beefits quatified ad uquatified from a variety of aalyst sources: Reductio i ivoice processig costs Reductio i errors ad exceptios Icrease i capture of trade discouts due to faster processig ad approval Reductio i time spet aswerig suppliers' questios Reductio i routig ad circulatio costs for ivoice approval Reductio i archival, storage ad retrieval costs Icrease i the value of AP departmet services Icrease i compliace with audit requiremets, Sarbaes-Oxley, amog others Demostrate the orgaizatio's commitmet to sustaiability Improve relatios with suppliers with highly efficiet processes Improve orgaizatio's brad image i the market Thik Ivoice Capture The Big Challege Not all suppliers are e-ivoice capable ws.com 03

6 What is the distributio of ivoice volumes? Typically, percet of suppliers accout for 80 percet of ivoices What are the suppliers' capabilities? It is surprisig how may suppliers are ot capable of e-ivoicig What types of suppliers exist? Temporary labor suppliers, cosultats, goods for resale, utilities Do they offer / are they iterested i early paymet discouts? WNS typically rus a supplier survey to establish supplier techical capability. Ivoicig Hubs ad OCR O-boardig suppliers gettig them to submit e-ivoices directly to your system is a very challegig propositio. You may be fortuate ad fid that your major suppliers are already e-ivoice capable, but a recet survey for a WNS cliet showed that oly six percet of its suppliers were so capable. A umber of ivoicig hubs exist with a varied presece i differet geographical markets. These hubs ca offer real value i committig to o-board your major (ivoice volume) suppliers to e-ivoicig via their hub. You the receive a sigle cosolidated file from the hub. This route to ivoice capture is growig i popularity. Ufortuately, these hubs do ot geerally offer iteroperability so it ca be all your eggs i oe basket! Clearly, some suppliers will ever be o-boarded ad will isist o stickig to paper. This is where OCR delivers value to 'mop up' o-compliat suppliers. Some orgaizatios have simply redirected all their paper ivoices to a OCR scaig bureau receivig a cosolidated e-ivoice file from the bureau. Although OCR will arguably be arguably more error-proe tha a hub, it has the merit of ot disruptig the suppliers' processes (they cotiue to prit ad mail ivoices). Some hubs use OCR bureau to capture the tail of suppliers they caot o-board electroically. Other hubs leave maagemet of the tail to you. Assess Istitutioal Readiess Typically, a AP shared-service ceter is cetral to optimum efficiecy, as is the cetral scaig ad workflow of ivoice images. Are these acceptable cocepts withi your orgaizatio? Are stadard processes a aathema to your busiess users? Do you have the skills i your orgaizatio to hadle greater automatio? Where are your blockers? Is a o-po o-pay policy realistic? 04 ws.com

7 Accouts Payable Automatio Realize Sustaiable Beefits with a Well-costructed AP Automatio Strategy Exteral State Uiformed Optimism Iformed Optimism Commitmet Past State Exploratio Future State Iformed Pessimism Iformed Scepticism You eed to cosider: Curret processes ad orgaizatio Istitutioal ability to chage Curret solutios deployed Competig priorities Review Available Solutios New solutios are costatly beig offered ad existig solutios are gaiig i maturity. The aalysis below explores curret solutio maturity. Iteral competecies Paymet Iovatio Life cycle Itroductio Growth Maturity Declie P-Cards Paper Check E-Procuremet B2B E-Paymets Frot-ed Imagig ad Workflow EDI Dyamic Discoutig OCR Electroic Ivoicig Iovators Early Adopters Majority Laggards The Market for Paperless Tools is Expadig but is Still i Its Ifacy ws.com 05

8 Despite this rage of solutios, uptake remais stubborly low. Some specific fidigs by research firm Garter, Ic. iclude the followig: U.S. compaies sped as much as USD 150 to process each accouts payable ivoice. More tha 95 percet of all busiess-to-busiess trasactios are still settled with paper ivoices ad checks. As much as 70 percet of ivoice processig costs ivolve documet hadlig, data etry ad related maual tasks. A early Acceture Report (focusig o dyamic discoutig) has oted that: For may compaies, ivoice settlemet processes are, well, usettlig. For oe thig, the processes are paper- ad people-itesive, which is why the full ivoice-to-pay cycle takes betwee 30 ad 120 days. I fact, up to 50 percet of paper ivoices are past due whe they arrive i accouts payable [ad]...betwee 10 ad 40 percet of ivoices ivolve a exceptio process, which ca triple the trasactio's timelie ad cost. Typical Solutio Aligmet to Supplier Base Vedor Portal for Query Hadlig XML Self-billig Lodge Card OCR / Image Scaig Vedor Portal Purchase Card Typically, high ivoice-volume suppliers should be targeted for e-ivoicig. Ifrequet or small suppliers may be suitable for purchase cards or supplier portal. The objective is to squeeze paper ivoices out of the process by expadig the adoptio of the aforemetioed solutios. Paper will ievitably remai ad will eed to be processed as efficietly as possible hece OCR or simple image scaig ad key-from-image workflows. As re-assurace, we have a cliet who is usig key-from-image ad processig 38,000 ivoices per FTE. We will explai the solutios available their relative merits, costs ad complexity. The objective is to alig solutios to your supplier base to deliver the best possible outcome for the orgaizatio. Solutios Available The rage of solutios curretly i the market icludes, but is ot limited to: Electroic Ivoices XML or EDI e-ivoices with ad without suitable middleware to eable automatic ERP postig. 06 ws.com

9 Accouts Payable Automatio Realize Sustaiable Beefits with a Well-costructed AP Automatio Strategy Without lie-item-matchig, middleware automatic postig rates of oly 20 percet are likely. With suitable middleware automatic postig, success of 85 percet ca be realized. ERS (Self-billig) This fuctioality exists as a stadard i may ERP. It eables the paymet of suppliers o receipt of goods or services without havig to receive a ivoice. This process is ofte ideal for temporary labor where timesheets ca be received ad approved electroically. The timesheet approval would trigger paymet without the eed for a ivoice. OCR with SAP Middleware (i-house or through a scaig bureau) OCR offers a o-disruptive route to paperless processig; this is realized through a suitable outsourced scaig bureau. Key from Image This ivolves the cetral capture ad scaig of paper ivoices. Each image the triggers a workflow to a iput operative who keys the ivoice to your ERP from the image. The image is automatically liked to ivoice trasactio ad thereby retaied to support exceptio workflows ad audit. Purchasig Cards Purchasig Cards are desiged to be used for low-value purchases where i most cases they reduce the eed to create purchase orders ad process ivoices. The chose bak will sed a periodic statemet to each cardholder to recocile. These statemets are electroic ad ca be automatically processed withi SAP, thereby reducig the amout of paper received. There are a umber of coucils usig Purchasig Cards effectively. The best case study is Machester City Coucil, which will sped GBP 70 Millio through cards with over 400 suppliers. It is estimated that the cost of process i GBP 12 per paymet usig the traditioal method to less tha GBP 1 per paymet. All departmets use cards for various types of purchasig. The Coucil saved over GBP 6 Millio i 2004 / Supplier Portal This ca be a meas of ivoice etry for small suppliers. It ca also deflect telephoe queries from larger suppliers by providig Web access to their accouts. Surveys idicate that a average AP departmet speds 20 percet of its time respodig to supplier paymet queries (Aberdee Group, May 2009). Busiess Process Outsourcig The BizAps suite of solutios is owed by WNS, a major busiess process outsourcig firm. WNS rus the fiace ad accoutig back-offices for global orgaizatios such as British Airways, KLM, Aviva, T-Mobile, lastmiute.com, FedEx ad Cetrica. WNS is able to offer BizAps solutios ad BPO services usig outcome-based pricig or trasactio-based pricig. Captive Shared Services Here, a orgaizatio sets up a cetralized fuctio typically for trasactio processig. E-Ivoicig Hubs Some compaies commit to esurig that your key suppliers submit e-ivoices to their hub. The hub the periodically seds a cosolidated file of ivoices to you. It is importat to realize that you will require a middleware to eable the automatic postig of ivoices to your ERP. Automatic postig levels of percet ca realistically be achieved with suitable middleware. ws.com 07

10 Approval ad Codig Workflows Combied with ivoice imagig, these simple workflows expedite ivoice exceptio maagemet. Purchasig Solutios It should ot be forgotte that the purchasig solutios deployed ca have a sigificat impact o the efficiet processig of resultat ivoices. High PO compliace results i efficiet payables. Catalog procuremet results i fewer pricig exceptios. WNS has developed a ROI spreadsheet to help orgaizatios model possible outcomes based o the use of differig automatio tools. Establish a Roadmap Havig established which solutios should be deployed ad developed for a viable busiess case, it is ecessary to establish a realistic implemetatio strategy. The strategy typically icludes cosideratio of: Goverace Rollout Pla (orgaizatioal phasig, solutio phasig, big bag) Iteral Resource Requiremet Risks / Depedecies Timelies / Milestoes Stage of AP Automatio Type of Solutio Workig Capital 4 Level of Automatio 1 Cetralized Sca Ivoices Maual Idexig Tactical 2 OCR ad Key From Image Olie Matchig Approval Workflow Automated Reports Collaborative 3 Outsource Data Capture PO Flip Automated Matchig Olie Dispute Resolutio 100% Electroic Ivoices Supplier Self Service Superior Oboardig Itegrated Purchase-to-Pay Processig Cost Per Ivoice Maual Approval Source: Paystream Advisors Viewpoit 08 ws.com

11 About WNS's BizAps Solutios BizAps, a member of the WNS group, ad leadig SAP cosultacy ad SAP packaged-service parter, was acquired by WNS i October Accouts Payable Automatio, Realize Real Beefits, Fast with a Well-costructed AP Automatio Strategy The BizAps suite of itegrated ERP techology solutios have bee deployed for a variety of global Fortue 500 compaies. These SAP ad Oracle-certified solutios rage from ed-to-ed Accouts Payable optimizatio tools, Vedor Portals, ERP-Card program maagemet software ad SAP SRM deploymets. All BizAps P2P solutios are desiged to promote eterprise-wide procuremet effectiveess, paymets cotrol ad process efficiecy.

12 Copyright 2012 WNS Global Services About WNS WNS is a leadig global busiess process solutios compay. WNS offers busiess value to 200+ global cliets by combiig operatioal excellece with deep domai expertise i key idustry verticals, icludig Travel, Isurace, Bakig ad Fiacial Services, Maufacturig, Retail ad Cosumer Packaged Goods, Shippig ad Logistics, Healthcare ad Utilities. WNS delivers a etire spectrum of busiess process outsourcig services such as fiace ad accoutig, customer care, techology solutios, research ad aalytics ad idustry-specific back-office ad frot-office processes. WNS has delivery ceters world-wide, icludig Costa Rica, Idia, the Philippies, Romaia, South Africa, Sri Laka, UK ad US. To lear more, please write to us at marketig@ws.com